29th August 2005

Market opportunities for the Indian offshore software testing companies in 2005 is estimated at US$2 billion—according to industry estimates, it could exceed US$8 billion by 2008.

Stepping into the emerging era of "24x7 enterprises", where business can never sleep, organisations rely on the IT infrastructure 24 hours a day.

Each little application becomes critical and no error can be termed small. In this new context, the true value of testing assumes greater significance.

According to a recent research titled, "Driving Business Value from IT: Optimising the New IT Environment," conducted for Mercury by the Economist Intelligence Unit on the top IT challenges and priorities, there is an increasing focus on improving quality of IT solutions.

There are number of cases, where the businesses have had significant financial and credibility losses, due to deployment of untested systems. As per one study, the US industry had incurred losses to the tune of US$60 billion in 2002 due to software defects.

The Industry: An assessment by Avendus Advisors places the global market size for software testing at US$100 billion. The share of the independent testing companies in India was US$20 million in 2003-04.

According to some estimates, the market opportunities for the Indian offshore software testing companies in the current year could be US$2 billion. Industries expect the market size to touch US$ 8 billion by 2008.

Chennai as a Testing Hub

The current market size and the estimated growth (at an compound annual growth rate (CAGR) of 92 percent) have created a lot of excitement in the industry. In India, Chennai is fast growing as a major software-testing destination. "The city is undoubtedly emerging as the software testing hub of India," says Vanaja Arvind, Executive Director, Thinksoft Global Services, one of India’s leading standalone and domain-focused independent software testing companies.

While the early entrants - Thinksoft, Maveric, AmitySoft, RTG, etc. - leading the band, relatively new players are also doing a booming business.

Trimentus Technologies, established in 2002, has done a million dollar business the previous year and looks for a two-and-a-half times growth this year. Standardisation Testing Quality Certification (STQC), a significant player in testing, has set up its testing facility in Chennai recently.

Also, large IT service providers are adding the testing services in their service offerings. For instance, Cognizant Technology Services is strengthening its testing activity. "Testing is one of the fastest growing service offerings for Cognizant," says G Sumitra, Director, Testing Practice. The company is seeing significant traction in its testing practice. In 2004, the number of career testers of Cognizant grew from 200 to over 1000 - the number is expected to double in 2005.

The world leaders in testing like Mercury and RelQ have set up their offshore base in India. Mercury India, the Indian arm of Mercury Interactive Corporation, which is into business technology optimisation (BTO), says that its Indian centre would cater to the application delivery and application management market, which is expected to emerge as one of the most strategic areas of IT investments.

To be successful globally and garner a large share in the outsourcing market, the players need to focus on strengthening their capabilities in automated testing, which is a must to support a number of mission critical processes.