Your client is a Philippine BPO company that has experienced a 15% decline in profit margins over the last two years, despite growing revenues. What could be driving this decline, and how would you go about identifying the root causes?

Situation

During a consulting bootcamp case competition, my team was given a similar scenario with a local logistics provider suffering margin erosion.

Task

I was responsible for leading the quantitative analysis and synthesizing our recommendations.

Action

I structured our approach around a profit tree, breaking down costs into fixed vs. variable and revenue into price vs. volume. I hypothesized that rising employee attrition was increasing recruitment and training costs, while client price concessions to retain business were compressing revenue per FTE. We tested these using limited data: we calculated the cost-per-hire from HR metrics, estimated training time loss from agent ramp-up curves, and compared bill rates from recent contracts. We also segmented the client base by profitability and found that 30% of clients were on legacy contracts with margins below target.

Result

Our analysis pinpointed a 12% point margin leakage from high-turnover low-productivity accounts. Our recommended three-pronged strategy, renegotiate out-of-scope work, invest in predictive attrition analytics, and exit the bottom-quartile clients, was judged the most actionable by the partner panel, earning my team first place.