Software Testing Market India

(1)

(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

 Role and importance of IP Led Testing

(3)

•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

(5)

SAMPLE

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

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

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

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

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

Segment B

Segment A

(9)

SAMPLE

Software Testing Market – Segmentation

In-house Testing

Services

Outsourced Testing

Services

In-house Testing

Services

Text

In-house Testing

Services

Outsourced Testing

Services

Text

• Text

Software Testing

Market

(10)

Independent testing services are more in demand as compared

to Traditional testing services

• Text

X1%

Y1%

20--

X1%

Y1%

20--

Text

A Segment

B segment

(11)

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

(12)

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

Impact

Government Initiatives

Indian software testing market will witness further growth

owing to the recent government initiatives

(14)

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

Reasons

Text

(15)

SAMPLE

Software Testing in Key Sectors (1/6)

Software Testing in Sector A

Text

Owing to

Text

(16)

Software Testing in Key Sectors (2/6)

Software Testing in Sector A – Case Study

Vendor

Requirement

Solution

Benefits

• Text

Client

ABC Ltd

XYZ

(17)

SAMPLE

`

Need for Mobile Application Testing

Shift towards Cloud based Testing

Text

Trends – Summary

Key Trends

Text

(18)

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

(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

(20)

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

(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

(22)

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

(23)

Key People

Products and Services

Offices and Centres – India

Corporate Address

Tel No.

Fax No.

Website

Year of Incorporation

Ticker Symbol

Stock Exchange

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)

(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

(25)

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)

(26)

Public-Domestic Company: Company A – SWOT Analysis

(4/4)

T

O

W

S

(27)

Key People

Products and Services

Offices and Centres – India

Corporate Address

Tel No.

Fax No.

Website

Year of Incorporation

Private-Domestic Company: Company B. (1/5)

Head Office

Products/Services

Products

Mumbai

Name

Designation

Person 1

Chief Financial Officer

Person 2

Head of Project

Person 3

Whole Time Director

(28)

Private-Domestic: Company B. – Shareholding Pattern (2/5)

Ownership Structure

Note: Shareholding pattern as on AGM dated 29th_{Sep 2012}

X%

Y%

(29)

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

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)

(30)

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

(31)

Private-Domestic Company: Company B – SWOT Analysis

(5/5)

T

O

W

S

(32)

Opportunities (1/2)

Opportunities in Testing Market in India

E

A

R

L

I

E

R

N

O

W

~ abc

mn

~ xyz mn

Text

• Text

Text

(33)

Opportunities in IT Hubs in India

Mumbai

X

Y

(34)

Strategic Recommendations

Text

• Text

Text

• Text

Text

(35)

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