Problem Statement:

1. Choose an industry with which you are familiar. Preferably, pick an industry where you
have work experience and understand the business.
2. Find a news article from a reputable source that addresses an issue or change that could
impact your industry. The news article has to have been published since the start of this
class. If youd like me to review the article you choose in advance for suitability, please
email me a link.
3. Craft a pretend email to leadership in a company in the industry that you have selected to
bring the current event to their attention.
a. Provide them with your analysis of why they should care about the content of the
article. Think about what it could mean for the company and/or industry.
b. Connect the article to two topics that you learned in class. Provide a thoughtful and
thorough explanation of how each class topic relates to the content of the article and how it
could be used in this particular business setting. You will be writing to bring these strategies
to their attention as a way to respond to the news article.
4. The email must be professionally written and include a link to the news article.

My Draft E-mail:

Hello Vishal Sikka,

I am certain that you would be aware of the newly rolled out Good and Services Tax, a
promising radical reform effective 1 July, 2017.
The new policy has made the country free from shackles of an obsolete multiple tax systems
and the expectations are rife that this will boost the Indian economy.
Albeit the advantages galore, I would like to point out the downsides of it, accentuate the
impact on the Information Technology (IT) sector especially on our esteemed organization,
Infosys, the second largest IT Company of the nation.
Because of this new tax, more are the chances that the final cost of the entire project will be
higher than the initial estimates.
It is certain that we will be running over-budget. Failing to handle this situation properly will
make things run amok.
I would like to brief out certain main challenges in the order of magnitude.

Our company's management principles and our motto C-LIFE (Client Value -> Leadership by
Example -> Integrity -> Fairness -> Pursuit of Excellence) are renowned for driving Infosys
in today's global IT market. And, the first and foremost issue of this new tax policy is that
there is a clause that can undermine our client value. Case in point, GST holds a new
provision named 'Place of Supply'. This clause comes into picture if the services delivered
under a single contract spans across states. The process becomes cumbersome as this may
require multiple invoicing and billing. Also, the final cost to be charged from the clients will
be far higher than the quoted value. This can spark disputes and might even lead to litigation.
To ensure that things run smoothly without any glitches, at the outset we have to consult a
legal advisor to understand the implications. To ascertain a smooth transition, the competent
parties should be apprised of the new norms and we should make amendments to the existing
contracts to accommodate GST.

The next impending issue is the process of tax compliance. At present, we have central
service tax and a single point of taxation. But, the GST regime has three tax points namely
central GST, inter-state GST, and state GST. These three GSTs with 37 jurisdictions in our
country alters the total number of points of taxation from one to 111. This challenges the ease
of doing business and can make the process of filing of taxes complicated. Currently, this
issue is virtually non-existent as the exact procedure is not readily apparent and we still have
ample time to file our tax. Certainly, we will be getting more insights on the days ahead. Post
that, our administrative team should be trained and be well prepared to handle this. The cost
and the time involved for this training will be a challenge.

Another challenge is for our development centres located in Special Economic Zones (SEZ).
SEZs receive various perks in terms of taxation, trading, labour regulations given by the
government. But, this newly implemented policy holds no provision for an upfront tax
exemption and the tax refunds should be separately filed by the organization. So, our finance
team should be able to manage this unforeseen expense incurred.

One more additional burden is that the cost of inventory will go up. This is because, the tax
for commonly used electronic equipment like printers, photocopier and fax machines has
been increased to 28 percent. The increase in tax will in turn increase the total cost of
purchase and new procurement will be costlier. To manage this initial cost overrun, our
budgeting team should allocate sufficient funds to manage this steep increase.

The documentation of the entire process should be amended accordingly to include the
changes due to this new tax. This will be a time-consuming task.

After a thorough risk analysis & assessment, the below Probability and Impact Matrix gives a
vivid picture on the risks involved.

High Impact No upfront tax exemption Legal issues

Low Impact The cost and the time for Increased cost of inventory
training administrative staff for
filing tax. Time taken for
documenting changes.

Low Probability High Probability

In my perspective, out of three major project performance measures (cost, time and scope),
cost will be highly increased, time will have a subtle impact and the scope remains
unchanged because of this new tax.

I would like to re-emphasize that the actual cost incurred for the current projects will vary
from the original cost estimate by a significant percentage and this can necessitate revising
the budget as well as the funds allocated for each unit.
Request you to be deftly prepared for tackling the aforementioned challenges so that we can
reap the benefits under the blanket of the Indian GST.

References:

1. News article: https://www.forbes.com/sites/krnkashyap/2017/07/10/the-four-benefits-of-

the-new-goods-and-services-tax-gst-for-startups-in-india/#26b438741ef1

2. Cost and Value Management in Projects (Venkataraman and Pinto)

Regards,
Lakshminarasiman S