Background
TechNova Services Ltd., a Bangalore-based IT services company, has successfully built a global reputation delivering enterprise software development, cloud migration, and managed services for clients in the U.S. and Europe. Their business model largely relies on offshore delivery from India, operating under fixed-price or time-and-material (T&M) contracts.
Encouraged by success in mature markets, TechNova’s leadership decides to enter Latin America, targeting mid-sized banks and telecom firms in Brazil, Chile, and Colombia. The goal is to capture regional demand for digital transformation and cloud services — but local market conditions present surprises.
The Challenge
Upon market entry, TechNova realizes that:
- Local clients expect lower prices due to strong competition from near-shore providers in Mexico and local boutique firms.
- Clients prefer Spanish/Portuguese-speaking teams, available in similar time zones.
- Contracts are often outcome-based or subscription-oriented, not traditional T&M.
- Local data residency regulations limit the use of offshore infrastructure for certain workloads.
- Currency fluctuations and high import duties on IT equipment further complicate cost structures.
TechNova’s CFO argues for maintaining a global standard pricing model to protect margins and ensure simplicity. However, the regional head insists on localized pricing and delivery to win deals and build credibility.
The global leadership team now faces a strategic dilemma — Should TechNova adopt differentiated local pricing and service models or maintain global uniformity for consistency and control?
💡 Address the following specific questions
- What are the key factors driving the need for local adaptation of pricing and service models in this case?
- What risks and benefits do you foresee in adopting differentiated regional pricing versus a global standardized pricing model?
- How can TechNova manage margin pressures in lower-priced markets while remaining competitive?
- What governance mechanisms should TechNova establish to manage local pricing flexibility without losing global financial control?
- How might TechNova redesign its service model (e.g., on-shore, near-shore, hybrid) to align with local client expectations and regulatory needs?
Dr. Selvaraj Vadivelu 