Bain & Company Interview Questions, Process, and Tips

Q1. Tell me about yourself.
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Q2. Where are you from?
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Q3. How have you been coping with COVID's impact in Delhi?
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Q4. What's a Startup Studio's business model like?
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Startup Studios build and launch startups using their own resources and expertise.
• Startup Studios provide resources such as funding, office space, and mentorship to startups in exchange for equity.

• They typically have a team of experts in various fields such as marketing, product development, and finance to help startups succeed.

• Examples of successful startup studios include Betaworks, Science Inc., and Idealab.

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The client is a billion-dollar IT services player (application and infrastructure management). They have been lagging behind in profitability and need help with this problem.
[Please note that I stands for Interviewer and C stands for Candidate]

C: What is the quantum of the lag in profitability? Is there any data available for how short is the company falling of its targets? Also, since when has the company been facing this issue?

I: Yes, the company has been clocking 12-13% EBITDA compared to a 15-16% expectation. The issue has come to light in the last 3-4 years.

C: Thank you. As I am not too aware of the concerned industry here, could you help me understand what do we exactly mean by ‘application and infrastructure management’ services?

I: Application services are simply app development and maintenance while infrastructure management services range from cloud-based data management to ERP solutions to core system maintenance and a few other add-ons.

C: I would like to know a bit about the client to establish some context here. Can you help me the following details? Location, Areas of operations (client bases), age/maturity of company, size of the company (in terms of workforce- as it is an IT services company).

I: Sure! The company is based in India and has offices in Bangalore, Chennai, Pune, and Trivandrum. It is a mid-90s company and has approx. 2500 employees. 80% of the client base is in US.

C: Sounds good. To understand the offering better, is it safe to assume that the company offers customized solutions to every client given different scales of client firms?

I: Yes absolutely. The requirements of every client would differ based on its scale and specific solution needs.

C: Also, I would assume that there would be a fair amount of competition in India in this industry. Can I get some information on the competitive landscape here?

I: Yes, that is correct. There are 3 tiers of companies serving as good competition. Tier-I would be the likes of TCS & Infosys, we would be a part of Tier-II followed by smaller local players.

C: Thank you. I have sufficient information to dive into the issue. As the company is experiencing a profitability issue, I can define profits as Revenues - Cost considering a single stream of revenue which is service fees.

I: Yes, ignore revenues for now, let us look at costs for the client.

C: Sure! As it is an IT services company servicing mostly US-based clients, people’s costs would be a major component of total costs for the client apart from other operational and non-operational costs like.

I: Yes, ignore other costs for now. Let us focus on personnel costs which forms 80% of total costs.

C: To ascertain personnel costs, I would like to use the following equation = No. of offices x No. of projects x Avg. no. of people per project x Avg. CTC.

Moreover, Avg. no. of people and CTC will be different for different tiers of employees.

I: Yes, that seems fine but on what other ‘lever’ would the costs depend?

C: Further, the projects would have different tiers of personnel and their CTCs will be different based on level of skill/seniority.

I: Yes correct. Can you think of any other ‘lever’ that could vary costs in this context?

C: I have a few questions which I need more clarity on. Is the employee structure top-heavy or bottom-heavy? Moreover, could efficiency of certain tiers of employees also be a cost driver here?

I: In such a firm, the structure is almost always bottom-heavy. Also, what do you mean by efficiency, can you explain your thought process behind this. You can also consider the office space available as a factor of personnel costs in this context.

C: Sure. By efficiency I meant the amount of time that an average team would take to complete a project and benchmarking that with that of other competitors, we could get an idea about the relative efficiency of the workforce. Also, I think I missed the space aspect earlier. Different office locations would have different office space available and hence, the costs could vary across these locations. Would you want me to explore this further?

I: Yes, that sounds good. How would you benchmark the efficiency of employees when projects are customized and not uniform across various clients in different industries?

C: Yes, I agree that benchmarking would not be fully accurate, but it is just to get an idea of relative costs. If we take a hypothetical project and allocate a group of employees and compare across competitors for the same, we might be able to assess if we are less or more efficient than them and get an idea of relatively higher/lower costs.

I: Alright, that makes sense but like you said, it is not possible to have this data and hence is a hypothetical scenario. Also, we have ¾ mins. left with us. Can you quickly think of some additional points that could drive personnel costs?

C: I have a few more points which could be cost drivers. Firstly, we could look at benchmarking the salaries of different tiers of employees with that of the competitors. Secondly, we can compare the utilization of employees per annum and compare it with that of competitors.

The client is a specialized chemicals manufacturer and is facing issues with its profitability. They need us to help them figure the problem and recommend solutions.
[Please note that I stands for Interviewer and C stands for Candidate]

I: Focus only on structure and idea generation.

C: Sure! Since how long has the client been facing these issues? Also, I would like to know a bit about the client and the industry it operates in and the timeline in which the client is looking to resolve the issue.

I: Let me help you with some initial information. The client manufactures chemicals used further to produce plastics, paints, textiles, and leather goods. It has 400 different SKUs and clocked revenues of INR 160 Cr. last year. They require quick solutions which can be implemented within a 2-3-week period.

C: Thank you for that information. (Made some assumptions and confirmed with the interviewer: B2B clients pan-India and business model/value chain were from Sourcing-Manufacturing-Sales & Distribution). Asked a few more questions about the competitive landscape.

I: Yes, you can go ahead with that understanding. Ignore the competitive landscape. Although could you tell me the kind of clients this company could have?

C: Yes, I would assume consumer durables, apparel, lifestyle brands to be key clients. Is that a good assumption?

I: Yes, that sounds good. Go ahead!

C: I will break down profits into Revenue-Cost. Assuming multiple revenue streams and cost centers for 4 different types of products, would you like me to focus on any of these specifically or can I explore each one by one?

I: Yes, that is a good point. Leather products are driving down the profitability primarily. Can you explain about the cost structure/heads of this company?

C: Sure. On the nature of costs, I could divide them into Operational & Non-operational costs. On the basis of behavior, I could use a Fixed, Variable & Semi: variable classification.

I: Good. Name a few operational & non-operational costs here and let us proceed with it then.

C: Under operational costs, I would list down raw material costs, labor costs, in-bound logistics cost, production process costs, warehousing & storage costs and distribution costs including outbound logistics, R&D costs, Administrative costs, and technology costs. Under non-operational I would consider depreciation and finance costs.

I: Alright, let us move to the revenue aspect now. How would you proceed?

C: Before I dive into it, could you help me with an SKU distribution across all 400. This is to determine how heavy is the leather products’ SKU share among the overall SKUs offered.

I: Sure. Consider it as 50, 70, 120 & 160 SKUs for plastics, paints, textiles, and leather goods, respectively.

C: Thank you. As we can observe that leather goods for the highest share of the overall SKU mix, the top line can be majorly affected by leather goods. Following this, I would break the revenue as no. of leather goods’ units produced avg. price of leather SKUs. Do we have any information on the quantity produced or the pricing policy/trends that the client has observed for their goods in the past?

I: Good observation. So, the client follows a cost + mark-up pricing model. The quantity of production has not changed. Anyway, can you quickly suggest some ideas for a company like this to improve profitability?

C: As we have a short timeline to improve profitability, I would look at the SKU mix offered. We would have to increase sales effort on certain SKUs and reduce or phase out a few. Producing and selling larger SKUs could reduce carrying costs and packaging costs. Since our clients are all B2B, if the smaller SKUs are not truly relevant, we could look at reducing sales of these and reallocate resources towards larger SKUs. Would that be a fair suggestion?

I: Yes, although the cost of producing the primary material is the same across all SKUs, the other product costs could be tweaked. I like the idea of pushing large SKU sales although phasing those out would not be recommended as there are certain buyers for its who would not purchase beyond a certain limit due to many reasons. If phased out, the revenue and profits from that segment could get totally wiped out.