market research report : software testing market in india 2014 - press release
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2
Executive Summary
Market
Drivers & Challenges
Trends
Competition
Software Testing market in India was valued at ~ INR xx bn in 20-- and is projected to grow at a CAGR of ~ x1% between 20--- and 20--
Over the past decade, India has become one of the major destinations for outsourcing software testing services owing to the availability of a cost effective talent pool
The United States is the key market for the big Indian testing vendors, followed by Europe and Middle East
Need for Mobile Application Testing
Drivers
– Dominance of IT Service Sector
– Growing Acceptance Among Customers
– Rapid Evolution of Vendor Capabilities
– Adoption of Unique Growth Strategies by Vendors
– Government Initiatives in Indian IT and ITeS
Sector
Challenges
– Dearth of Required Skill
– Competition with Other Countries
Major Players
Company A Company B Company C
Company D Company E Company F
SOFTWARE TESTING MARKET IN INDIA 2014.PPT
Role and importance of IP Led Testing
3 SOFTWARE TESTING MARKET IN INDIA 2014.PPT
•Macroeconomic Indicators
•Introduction
•Market Overview
•Types and Benefits
•Drivers and Challenges
•Software Testing in Key Sectors
•Trends
•Competitive Landscape
•Opportunity and Recommendation
•Appendix
4
-2
-1
0
1
2
Economic Indicators (1/3)
11
12
13
14
15
b2
a2
Q1
d1
c1
b1
a1
Q4
c4
b4
a4
Q3
c3
b3
a3
Q2
d2
c2
INR tn
2013-14 2012-13 2011-12 2010-11
GDP at Factor Cost: Quarterly
Inflation Rate: Monthly
q
Jul 2013 - Aug 2013
p
%
Nov 2013 - Dec 2013
t
Oct 2013 - Nov 2013
s
Sep 2013 - Oct 2013
r
Aug 2013 - Sep 2013
SOFTWARE TESTING MARKET IN INDIA 2014.PPT
5
SAMPLE
SOFTWARE TESTING MARKET IN INDIA 2014.PPT
Software
IT Industry
IT Services ITeS- BPO
Software Products
Engineering and R& D services
Project Oriented Services
IT Outsourcin
g
Training and
Support
Training and Support
IT Consulting
Systems Integration
CADM
Network Consulting and
Integration
Software Testing
Application Management
IS Outsourcing
Others (SOA, web services, E commerce)
Hardware Deployment and Support
Software Deployment and Support
IT education and training
Infrastructure Software
Enterprise Application
Software
Training and Support
Training and Support
Training and Support
Focus of the report
Infrastructure Software
Hardware
IT Industry - Segmentation
6
SAMPLE India- The preferred destination for software testing outsourcing, providing unmatched quality… • India is recognized as a focal location for software testing outsourcing and it has a wide global clientele attached to it • More than half of the Fortune-500 companies outsource their testing work to India
Factors that have made India the most attractive outsourcing destination for software testing
Text
• Text
Text
• Text
Text
• Text
SOFTWARE TESTING MARKET IN INDIA 2014.PPT
a1% of US-based companies have
voted for India as their first and
most preferred choice for software
outsourcing
7
SAMPLE …and the largest pool of skilled resources
Text
• Text
Text
• Text
Text
• Text
SOFTWARE TESTING MARKET IN INDIA 2014.PPT
Text
8
Increased number of software development companies are outsourcing their software testing work to India
Software Testing Market Size and Growth
X1%
20--e
d1
f1
e1
20--e
s1
u1
t1
20--e
m1
INR bn
o1
n1
20--e
x1
z1
y1
20--e
p1
r1
q1
20--
a1
c1
b1
Note: Market size includes Export Revenue earned by India from outsourced software testing service and Revenue earned from domestic software testing service
SOFTWARE TESTING MARKET IN INDIA 2014.PPT
Segment B Segment A
9
SAMPLE Software Testing Market – Segmentation
SOFTWARE TESTING MARKET IN INDIA 2014.PPT
In-house Testing Services
Outsourced Testing Services
In-house Testing Services
Text
In-house Testing Services
Outsourced Testing Services
Text Text
• Text • Text
Software Testing Market
10
Independent testing services are more in demand as compared to Traditional testing services
• Text
SOFTWARE TESTING MARKET IN INDIA 2014.PPT
X1%
Y1%
20--
X1% Y1%
20--
Text
A Segment
B segment
11 SOFTWARE TESTING MARKET IN INDIA 2014.PPT
Drivers & Challenges – Summary
Drivers
Dominance of IT Service Sector
Growing Acceptance Among Customers
Rapid Evolution of Vendor Capabilities
Unique Growth Strategies
Government Initiatives
Challenges
Dearth of Required Skill
Competition from Other Countries
12 SOFTWARE TESTING MARKET IN INDIA 2014.PPT
Established IT services sector in India facilitates the growth of the Indian software testing market
• Owing to an established and dominant IT services sector, India is poised to capture a major
share of the global software testing market
India accounts for about c1% of global offshore IT services market and x1% of the global ITeS/BPO market
India’s IT services sector is expected to grow at b1% CAGR over the period of 20xx - xx
Dominance of IT Service Sector Impact
INR bn
x1%
20--e
g1
20--e
f1
20--e
e1
20--e
d1
20--e
c1
20--e
b1
20--
a1
Growth in IT Services Sector - India
a1% b1%
Segment 2
Segment 1
Share in A Market Share in B Market
b1%
a1%
Segment 2
Segment 1
13
Text Text
Text Text
Text Text
Text Text
Text Text
Text Text
SOFTWARE TESTING MARKET IN INDIA 2014.PPT
Impact Government Initiatives
Indian software testing market will witness further growth owing to the recent government initiatives
14 SOFTWARE TESTING MARKET IN INDIA 2014.PPT
Rising competition from other low cost nations poses a threat to India’s dominance in the testing industry
• Western companies find it profitable to outsource their software development and testing work
to countries where cost of human resources is much lower
It reduces development and production cost
Competition from Other Countries Impact
Text Text Text Text
Text
Text
Reasons
Text
Text
Text
15
SAMPLE Software Testing in Key Sectors (1/6)
Software Testing in Sector A
Text
SOFTWARE TESTING MARKET IN INDIA 2014.PPT
Text Text Text
Text
Text
Text Owing to
Text
Text
16
Software Testing in Key Sectors (2/6)
Software Testing in Sector A – Case Study
Vendor
Requirement Solution Benefits
• Text • Text • Text
Client
ABC Ltd
XYZ
• Text
SOFTWARE TESTING MARKET IN INDIA 2014.PPT
17
SAMPLE
`
Need for Mobile Application Testing
Shift towards Cloud based Testing
Text
Trends – Summary
Key Trends
Text
Text
Text
SOFTWARE TESTING MARKET IN INDIA 2014.PPT
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SAMPLE Porter’s Five Forces Analysis
Competitive Rivalry • xxx
Bargaining Power of Buyers • xxx
Threat of New Entrants • xxx
Impact Medium
Impact High
Impact Medium
Bargaining Power of Suppliers • xxx
Impact Medium to High
Threat of Substitutes • xxx
Impact Low to Medium
SOFTWARE TESTING MARKET IN INDIA 2014.PPT
19
SAMPLE Competitive Benchmarking (1/5)
Public Trading Comparables (FY 2013)
Player 1 Player 2 Player 3
Market Capitalization (INR mn) XX YY ZZ
Share Price (INR) XX1 YY1 ZZ1
EV/EBITDA (x) XX2 YY2 ZZ2
EV/Revenue (x) XX3 YY3 ZZ3
PE Ratio XX4 YY4 ZZ4
Note: Top 4 Public companies based on the Market Capitalization; Market Capitalization is as on --/-/2014, Share Price is as on --/-/2014 and PE ratio is as on --/-/2014
SOFTWARE TESTING MARKET IN INDIA 2014.PPT
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SAMPLE Key Ratios of 3 Major Companies – Operational Basis (FY 2013) (x/x)
Competitive Benchmarking (x/x)
-10
0
10
20
30
40
%
xxx
F E
xxx
D
C
xxx
B
A
Net Margin Operating Margin
• xxx
SOFTWARE TESTING MARKET IN INDIA 2014.PPT
21
SAMPLE Key Ratios of 3 Major Companies – Operational Basis (FY 2013) (x/x)
Competitive Benchmarking (x/x)
-50
0
50
100
%
xxx
F E
xxx
D
C
xxx
B
A
Return on Capital Employed Return on Equity
0.0
0.5
1.0
1.5
2.0
xxx
Y
xxx
H
xxx
G
Current Ratio
• xxx
SOFTWARE TESTING MARKET IN INDIA 2014.PPT
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SAMPLE Key Ratios of 3 Major Companies – Operational Basis (FY 2013) (x/x)
Competitive Benchmarking (x/x)
0.0
0.5
1.0
1.5
xxx
A3
xxx
A2
xxx
A1
Asset Turnover Ratio
• xxx
SOFTWARE TESTING MARKET IN INDIA 2014.PPT
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Key People
Products and Services
Company Information Offices and Centres – India
Corporate Address
Tel No.
Fax No.
Website
Year of Incorporation
Ticker Symbol
Stock Exchange
Category Products/Services
Electrical components
Equipment Name Designation
Person 1 Chairman
Person 2 Managing Director
Person 3 Director
Person 4 Additional Director
New Delhi
Public: Domestic Company – Company A (1/4)
Head Office
SOFTWARE TESTING MARKET IN INDIA 2014.PPT
24
Financial Snapshot Key Ratios
Financial Summary
• The company earned a net profit of INR ‘d2’ bn in FY 20--, as compared to net profit of INR ‘c2’ bn in FY 20--
• The company reported total income of INR ‘d1’ bn in FY 20--, registering an increase of ‘p’% over FY 20--
• It earned an operating margin of ‘x.x’ per cent in FY 20--, an increase of ‘y.y’ percentage points over FY 20--
• The company reported debt to equity ratio of ‘w.w’ in FY 20--, an increase of ‘z.z’ per cent over FY 20--
Key Financial Performance Indicators
Indicators Value (dd/mm/yyyy) Market Capitalization (INR mn)
Total Enterprise Value (INR mn)
EPS (INR)
PE Ratio (Absolute)
Particulars y-o-y change
(20-- – -- ) 20-- 20-- 20-- 20--
Profitability Ratios Operating Margin
Net Margin
Profit Before Tax Margin
Return on Equity
Return on Capital Employed
Return on Working Capital
Return on Assets
Return on Fixed Assets
Cost Ratios Operating costs (% of Sales)
Administration costs (% of Sales)
Interest costs (% of Sales)
Liquidity Ratios Current Ratio
Cash Ratio
Leverage Ratios Debt to Equity Ratio
Debt to Capital Ratio
Interest Coverage Ratio
Efficiency Ratios Fixed Asset Turnover
Asset Turnover
Current Asset Turnover
Working Capital Turnover
Capital Employed Turnover
Improved Decline
c1
Public: Domestic Company – Company A (2/4)
Net Profit/Loss Total Income
y4
y3
y2
y1
y
x4
x3
x2
x1
x
2012
c2
c1
2011
b2
b1
2010
a2
a1
INR mn INR mn
2013
d2
d1
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Key Business Segments Key Geographic Segments
Business Highlights
x2
x1
x
2013
c4%
b4%
a4%
2012
c3%
b3%
a3%
2011
c2%
b2%
a2%
2010
c1%
b1%
a1%
Segment 3 Segment 2 Segment 1
Description News
Overview
• Company A is a part of the Company 1Group established in collaboration with globally renowned , Country 2-based Company 2
• The company manufactures generators, multipurpose engines, chemicals, yarns, pipes, consumer durables, precision cutting tools etc.
• Company A got ISO 9002 certification in Month 19--, and has also been awarded ISO 14001 certification
Collaborations • Company A collaborated with Company 3 for manufacturing of diesel generators with Company 3 brand
of Engines
Expansion Plans • The group is planning to diversify and enter the IT industry
x2
x
x1
2013
100%
Region 1
Region 1 is the only geographic segment in which the company has
been operating for the past five years
Public: Domestic Company – Company A (3/4)
SOFTWARE TESTING MARKET IN INDIA 2014.PPT
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Public-Domestic Company: Company A – SWOT Analysis (4/4)
T O
W S
SOFTWARE TESTING MARKET IN INDIA 2014.PPT
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Key People
Products and Services
Company Information Offices and Centres – India
Corporate Address
Tel No.
Fax No.
Website
Year of Incorporation
Private-Domestic Company: Company B. (1/5)
Head Office
Category Products/Services
Products
Mumbai
Name Designation
Person 1 Chief Financial Officer
Person 2 Head of Project
Person 3 Whole Time Director
SOFTWARE TESTING MARKET IN INDIA 2014.PPT
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Private-Domestic: Company B. – Shareholding Pattern (2/5)
Ownership Structure
Note: Shareholding pattern as on AGM dated 29th Sep 2012
X%
Y%
X segment Y segment
SOFTWARE TESTING MARKET IN INDIA 2014.PPT
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Financial Snapshot Key Ratios
Particulars y-o-y change
(20– – --) 20-- 20-- 20-- 20--
Profitability Ratios Operating Margin
Net Margin
Profit Before Tax Margin
Return on Equity
Return on Capital Employed
Return on Working Capital
Return on Assets
Return on Fixed Assets
Cost Ratios Operating costs (% of Sales)
Administration costs (% of Sales)
Interest costs (% of Sales)
Liquidity Ratios Current Ratio
Cash Ratio
Leverage Ratios Debt to Equity Ratio
Debt to Capital Ratio
Interest Coverage Ratio
Efficiency Ratios Fixed Asset Turnover
Asset Turnover
Current Asset Turnover
Working Capital Turnover
Capital Employed Turnover
Improved Decline
Financial Summary
• The company incurred a net loss of INR –’d2’ mn in FY 20--, as compared to
net profit of INR ‘c2’ mn in FY 20--
• The company reported total income of INR 1,529.9 mn in FY 20--,
registering an increase of 0.34% over FY 20--
• The company earned an operating margin of ‘x.x’% in FY 20--, a decrease of
‘y.y’ percentage points over FY 20--
• The company reported debt to equity ratio of ‘w.w’ in FY 20--, a decrease
of ‘z.z’% over FY 20--
Net Profit/Loss Total Income
y4
y3
y
y2
y1
x3
x2
x1
x
a1
INR mn INR mn
2013
d2
d1
2012
c2
c1
2011
b2
b1
2010
a2
Private: Domestic Company – Company B (3/5)
SOFTWARE TESTING MARKET IN INDIA 2014.PPT
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Private-Domestic Company: Company B (4/5)
Key Information
Description Details
Overview
• Company B provides passive telecommunication infrastructure in India
• It was formerly known as Company B1. and it operates as a subsidiary of B3
• The company builds, owns, and operates telecommunication towers, optic fiber cable
(OFC) network, and related assets; and provides these passive infrastructure assets on a
shared basis to wireless and other communications service providers, as well as to non-
communications customers under long-term contracts
SOFTWARE TESTING MARKET IN INDIA 2014.PPT
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Private-Domestic Company: Company B – SWOT Analysis (5/5)
T O
W S
SOFTWARE TESTING MARKET IN INDIA 2014.PPT
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Opportunities (1/2)
Opportunities in Testing Market in India
EARLIER
NOW
~ abc mn
~ xyz mn Text
• Text
• Text
Text
SOFTWARE TESTING MARKET IN INDIA 2014.PPT
34
Strategic Recommendations
SOFTWARE TESTING MARKET IN INDIA 2014.PPT
Text
• Text • Text • Text
Text Text
• Text • Text
Text Text
Recommendations for Vendors
35
Thank you for the attention
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SOFTWARE TESTING MARKET IN INDIA 2014.PPT