market research report :software testing market india 2013

Software Testing Market IndiaSoftware Testing Market ‐ India

May 2013

Executive Summary

Market

Software Testing market in India was valued at around INR xx bn in 20‐‐ and is projected to grow at a CAGR of roughly xx% between 20‐‐ to 20‐‐

Over the last decade, India has become one of the major destinations for outsourcing software testing services owing to the availability of cost effective talent pool g y p

Country X is the key market for the big Indian testing vendors, followed by Country Y and Country Z

Drivers– Dominance of IT Service Sector

Challenges– Dearth of Required Skill

Drivers & Challenges

– Growing Acceptance Among Customers

– Rapid Evolution of Vendor Capabilities

– Adoption of Unique Growth Strategies by Vendors

– Government Initiatives in Indian IT & ITeS Sector

– Competition with Other Countries

Trends Need for Mobile Application Testing

Shift towards Cloud based Testing

Growing Demand for Testing as a Service (TaaS)

Rise in Adoption of Automated Testing

Development of Domain‐specific Service Offerings

Competition

Growing Demand for Testing as a Service (TaaS)

Major Players

Company A Company B Company C

2

Company D Company E Company F

SOFTWARE TESTING MARKET IN INDIA 2013.PPT

•Macroeconomic Indicators

•Introduction

•Market Overview

•Types & BenefitsTypes & Benefits

•Drivers & Challenges

•Software Testing in Key Sectors•Software Testing in Key Sectors

•Trends

C titi L d•Competitive Landscape

•Opportunity & Recommendation

3SOFTWARE TESTING MARKET IN INDIA 2013.PPT

•Appendix

SAMPLE Macro Economic Indicators (1/3)

GDP at Factor Cost: Quarterly

INR tn

15

1413.9513 24

14.1213 40

10.70

13.1612.39

11.47

10.58

14

13

12

11

10

13.24

12.13

13.4012.62

11.66

13.0612.2911.52

Inflation Rate: Monthly

Q1

10

Q4Q3Q22012‐132011‐122010‐112009‐10

y

0.910.93

0 8

1.0

%

0.460.460.47

0.2

0.4

0.6

0.8

4

0.0

Dec 2012 ‐ Jan 2013Nov 2012 ‐ Dec 2012Oct 2012 ‐ Nov 2012Sep 2012 ‐ Oct 2012Aug 2012 ‐ Sep 2012


Demand for software testing is on the rise to prevent huge losses…

•xx

Software Testing Market – Overview ‐ Global Market Size and Growth

INR tn

2.0

+5.1%x6x5x42.0

1.5

1.0

0.5

x5x4x3x2x1

0.0

20‐‐20‐‐20‐‐20‐‐20‐‐20‐‐

xx xx

x%

xx xx

x%

xxxx


y%

… incurred due to software bugs

Share of Testing Performance Pattern

Share of Spending

x1%x2%

x1%

1%y1%y2%

Pattern B

Pattern A

Spending in B

Spending in A


Quality assurance at low cost has attracted western software industry to Indian software testing market

• xx

Software Testing Market – Overview ‐ India India’s Contribution in Outsourced Testing

20‐‐ 20‐‐e

x1%

xxxx

x2%

y1%2%y2%

z1%

z3%z4%

z3%


xxxx

Increased number of software development companies are outsourcing their software testing work to India

Software Testing Market Size and Growth

500

550

INR bn

f

e

xxxx

300

350

400

450 +16.8%

a6

e

d

c

ba

100

150

200

250 a5a4

a3a2

a

a1

0

50

20‐‐

b6

20‐‐

b5

20‐‐

b4

20‐‐

b3

20‐‐

b2

20‐‐

b1

8

Note: Market size includes Export Revenue earned by India from outsourced software testing service and Revenue earned from domestic software testing service


ITS gains more popularity as enterprises doesn’t feel the need to invest in expensive hardware & software

Software Testing Export – Market Size & Growth

INR bnf

xxxx

100

200

300

400

500 +16.4%f

f2

f1e

e2

e1d

d2

d1c

c2

c1b

b

b1aa1

0

100

20‐‐20‐‐20‐‐

d2

20‐‐

c2

20‐‐

b2

20‐‐

a2

Note: Software testing export corresponds to revenue earned from outsourced software testing service by India

x% y1%

Over y1% of the xx in India is captured

by the xx

20‐‐

y%y2%

9

xxxx xxxx


Employing 180,000 people, premier software testing companies in India provides facilities and CoE to offer ITS

Market Share By Major Industry Verticals

1%

Market Share By Major Geographies

x2%

x1%

x4% Industry B

Industry A

y1%

y3% Country A

x3%Industry D

Industry C

y2%Country C

Country B

Market Share By Company Type in ITS

z1%

z2%

z1%

z3%

Type B

Type A

10

z2%Type C

Note: CoE refers to Centers of ExcellenceITS refers to Independent Testing Services


Drivers & Challenges

Drivers

Dominance of IT Service Sector Ch llDominance of IT Service Sector

Growing Acceptance Among Customers

Challenges

Dearth of Required Skill

Rapid Evolution of Vendor Capabilities

Adoption of Unique Growth Strategies by Vendors

G I i i i i I di IT &

Competition with Other Countries

Government Initiatives in Indian IT & ITeS Sector


Established IT services sector in India facilitates the growth of testing market in India

•xx

Dominance of IT Service Sector Impact

Share in Global Offshore IT Services Market Share in Global ITeS/BPO Market

45%55% Country A

35%

6 %Country A

INR bn

Growth in IT Services Sector ‐ India

Country B 65% Country B

879.7739.2

626.5527.8447.3388.9341.2500

1,000

INR bn

+17%


0

20‐‐20‐‐20‐‐20‐‐20‐‐20‐‐20‐‐

Software Testing in Key Sectors (2/4)

Software Testing in Banking – Case Study

Vendor xx

Requirement Solution Benefits

Client xx

• xx • xx • xx

13

• xx


Trends ‐ Summary

xx

xxxx

Key TrendsTrends

xx xx


Rapid growth of mobile phone applications has led to increasing need for its testing

Need for Mobile Application Testing

Rising need for • xx

mobile application testing

xx xx

Requires xx xxRequires

xx

xx xx xxThings to Test

xx xx xx

Popular


mobile apps testing tools

xx xx

SAMPLE Porter’s Five Forces Analysis

Threat of New Entrants• xx

ImpactHigh

ImpactHighImpact

M di

ImpactMedium to High

Competitive Rivalry• xx

Bargaining Power of Buyers• xx

Medium

Bargaining Power of Suppliers• xx

Impact

Threat of Substitutes• xx

Low


SAMPLE Vendor Mapping

Major Testing Vendors Independent Testing Testing with Development Process

Player A

Player B

Player B

Player C

Player D

Player E

Player F

Player G

Player H

Player I

Player J

Player K

Player L

Player M

17

Player M

Player N


SAMPLE Competitive Benchmarking (1/4)

Public Trading Comparables (FY 2012)

Player A Player B Player C Player D Player E

Market Capitalization (INR mn) ‐‐ ‐‐ ‐‐ ‐‐ ‐‐

Share Price (INR) ‐‐ ‐‐ ‐‐ ‐‐ ‐‐

EV/EBITDA (x) ‐‐ ‐‐ ‐‐ ‐‐ ‐‐

/EV/Revenue (x) ‐‐ ‐‐ ‐‐ ‐‐ ‐‐

PE Ratio ‐‐ ‐‐ ‐‐ ‐‐ ‐‐

18

Note: Top 5 Public companies based on the Market Capitalization; Market Capitalization, Share Price and PE ratio is as of 04/04/2013


Competitive Benchmarking (2/4)

Key Ratios of 3 Major Private Companies – Operational Basis (FY 2012) (1/3)

100

%x3

Net MarginOperating Margin

20

40

60

80

100

x2

1

x1

y3y2

0

20

Player A

y1

Player CPlayer B

• xx


Major Public Companies ‐ Summary

120,000

130,000

140,000

Net Profit/Loss

Size of the Bubble represents Market Capitalization in INR mn

80 000

90,000

100,000

110,000

0,000

m2

m1

40 000

50,000

60,000

70,000

80,000

m3

10,000

20,000

30,000

40,000

m7 m6

m5

m4

m80

‐50,000 0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000 500,000 550,000 600,000

m7 m6

Total income

m8

Player HPlayer GPlayer FPlayer EPlayer DPlayer CPlayer A Player B

20

Note: All figures are in INR mn and are based on the latest financials available


Public: Domestic Company – Player A (1/4)

Company Information Offices and Centres – India

Corporate AddressMGR Estates # 106‐107 Dwarakapuri Colony Punjagutta, Hyderabad

Andhra Pradesh 500082

Tel No. +91 40 3070 2250

Fax No. +91 40 2335 0667

Website www.cigniti.com/

Y f I tiYear of Incorporation ‐‐

Ticker Symbol 534758

Stock Exchange Bombay Stock ExchangeHyderabad

Head Office

Key People

Products and Services

Category Products/Services

Test advisory consulting, testing as a service, cloud based testing, functional Name Designation

IT Consulting and Other Services

gtesting, mobile testing, security testing, performance testing, test automation, compatibility testing, usability testing, and robotics testing

Name Designation

Chakkilam Venkat Subramanyam

Chairman & MD

Sudhakar Pennam Founder, President, CEO

Neravati Raja Chief Operating Officer

21

Neravati, Raja Chief Operating Officer

Chintala, SaiSenior Vice President of Global Enterprise Solution


Note: The list of products and services is not exhaustive

SAMPLE i i l S h K i

Public: Domestic Company – Player A (2/4)

Financial Snapshot Key Ratios

Particulars y‐o‐y change (2012‐11)

2012 2011 2010 2009

Profitability RatiosOperating Margin ‐0.64 6.00% 6.64% 6.12% 6.40%

Net Profit/Loss

Total Income

338.3300

400 15

INR mn INR mn

Net Margin 0.98 3.49% 2.51% 1.19% 1.32%

Profit Before Tax Margin 1.41 5.27% 3.86% 1.93% 2.61%

Return on Equity 1.64 3.10% 1.46% 0.52% 0.58%

Return on Capital Employed 1.41 4.69% 3.27% 2.14% 2.38%

Return on Working Capital 10.99 20.76% 9.77% 5.99% 6.24%

Return on Assets ‐0.04 2.98% 3.02% 2.06% 2.29%

75.950.650.7

0

100

200

300

0

5

10

2012201120102009Financial Summary

• The company earned a net profit of INR 11.8 mn in FY 2012, as compared to net profit of INR 1.9 mn in FY 2011

• The company reported total income of INR 338.3 mn in FY

Return on Fixed Assets 14.90 20.11% 5.21% 3.34% 3.86%

Cost RatiosOperating costs (% of Sales) 0.65 93.98% 93.34% 93.88% 93.60%

Administration costs (% of Sales)

‐12.43 9.09% 21.53% 22.04% 24.58%

Interest costs (% of Sales) ‐2.14 0.96% 3.10% 3.95% 3.79%2012, registering an increase of 345.9% over FY 2011

• The company earned an operating margin of 6% in FY 2012, a decrease of 0.64 percentage points over FY 2011

• The company reported debt to equity ratio of 0.42 in FY 2012, an increase of 138.9 per cent over FY 2011

Interest costs (% of Sales) % % % %

Liquidity RatiosCurrent Ratio ‐71.78% 1.39 4.94 10.12 10.81

Cash Ratio ‐91.08% 0.06 0.63 0.95 0.11

Leverage RatiosDebt to Equity Ratio 138.92% 0.42 0.17 0.18 0.12

b i l ian increase of 138.9 per cent over FY 2011

Key Financial Performance Indicators

Indicators Value (04/04/2013)Market Capitalization (INR mn) 2,420Total Enterprise Value (INR mn)

Debt to Capital Ratio 97.99% 0.29 0.15 0.15 0.10

Interest Coverage Ratio 191.98% 6.27 2.15 1.55 1.69

Efficiency RatiosFixed Asset Turnover 327.64% 3.34 0.78 0.55 0.60

Asset Turnover 9.43% 0.50 0.45 0.34 0.36

Current Asset Turnover ‐16.54% 0.98 1.17 0.88 0.88

22

Total Enterprise Value (INR mn) ‐‐EPS (INR) 3.47PE Ratio (Absolute) 41.20

Working Capital Turnover 135.25% 3.45 1.47 0.98 0.97

Capital Employed Turnover 26.38% 0.63 0.49 0.37 0.39

Improved Decline


SAMPLE Public: Domestic Company – Player A (3/4)

Key Business Segments Key Geographic Segments

100% 100%

Segment XSegment A

S X h b h lS t A h b th l

0%

50%

100%

100%

0%

50%

100%

100%

Segment X has been the only revenue generating segment for Player A during 2009‐12

Segment A has been the only revenue generating segment for Player A during 2009‐12

Business Highlights

0%

20‐‐

0%

20‐‐

Note: Business Segments and Geographic Segments are based on total revenues

Description News

Overview • xx

Industries Catered • xx

23

Expansion Plan • xx


SAMPLE Public: Domestic Company – Player A – SWOT Analysis(4/4)

• xx

• xx

WS

TO• xx

• xx


SAMPLE Strategic Recommendations

xx xx xx

Recommendations for Vendors

• xx • xx • xx

xx xx

• xx • xx


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market research report :software testing market india 2013

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