About role of cma..

1. COST COMPETITIVENESS – ROLE OF
COST & MANAGEMENT ACCOUNTANTS
SOFTWARE INDUSTRY PERSPECTIVE

2. IT INDUSTRY IN 2012
 The revenue from IT-BPO industry accounted for 7.5%
of our GDP in 2012.
 According to NASSCOM, the sector aggregated
revenues of US$100 billion ( export = US $69.1 billion
and domestic revenue =US $31.7 billion ).
 The 4 big IT service providers are Tata Consultancy
Services, Infosys, Wipro and HCL with revenue of $30
billion in 2012.

3. TREMENDOUS SOFTWARE EXPORT
GROWTH IN 2011-12 :

4. IT INDUSTRY EXPERIENCES RECESSIONS
 Global markets shrunk and Software exports
reduced.
 Significant drop in clients additions.
 Clients started negotiating in lower rates with the
suppliers – budget squeezed.
 Wage rates rose 10-15% due to skill shortage.
 Faced difficulty in sustaining with up going prices

5. NEED OF THE INDUSTRY :
 In such situation :
 The role of Cost and Management Accountant
(CMA) becomes important :
To suggest the vendor management to improve
efficiencies and economies with existing
infrastructure and human capital.
 Cost competitiveness

6. COST COMPETITIVENESS
 The ability of a business to compete with others on the
basis of its cost of production is COST
COMPETITIVENESS.
 When a business able of produce goods or services on
low cost as compared to its competitors it has
competitive advantage over the others.
COST MANAGEMENT
 Cost management is the process of planning and
controlling the budget of a business.
 It helps to predict impending expenditures to help
reduce the chance of going over budget.

7. FIXED BID & TIME AND MATERIAL BID
 In IT industry, vendor takes up new assignment either as
1. FIXED BID PROJECT
 Money flows only when project is completed with promised quality.
 Used when there are well defined requirements and schedules.
 Span – Few days to months
2. TIME & MATERIAL BID
 Funding project till completion – staff & resources
 Needs keep varying in all stages (Architecture, Analysis, Design)
 Span – few months to years
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8. ROLE OF CMAS IN IT/BPO SECTOR :
 A CMA with good knowledge can estimate and cost
the project well in scientific manner.
 A CMA can make efficient use of the human capital
and assets involved in the project.
 A CMA can do internal costing per resource after
analyzing the current market.
 A CMA can help in proper planning and execution.
The faster the execution, the more the margins.

9. CONCLUSION
 In days of crisis, even the IT Industry is in need of
Cost and Management Accountants (CMAs) to help
them to survive and sustain.
 Competitiveness is not an external but internal
factor which decides ‘Survival of the fittest’.
 These decisions related to costing cannot be made
by the team of technical leaders or managers. It
needs the art of costing and understanding of
market dynamics.