Market Research Report : Software testing market in india 2014 - Sample

Software Testing Market – India

July 2014

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


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 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




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


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


Text


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


X1%

Y1%

20--

X1% Y1%

20--

Text

A Segment

B segment


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


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


Impact Government Initiatives

Indian software testing market will witness further growth owing to the recent government initiatives


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


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


17

SAMPLE

`

Need for Mobile Application Testing

Shift towards Cloud based Testing

Text

Trends – Summary

Key Trends

Text

Text

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

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


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



-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



0.0

0.5

1.0

1.5

xxx

A3

xxx

A2

xxx

A1

Asset Turnover Ratio

• xxx


23

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


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


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



26

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

T O

W S


27

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


28

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


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

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)


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

EARLIER

NOW

~ abc mn

~ xyz mn Text

• Text

• Text

Text


33

Opportunities in IT Hubs in India

Mumbai


X

Y

• Text

34

Strategic Recommendations


Text

• Text • Text • Text

Text Text

• Text • Text

Text Text

Recommendations for Vendors

35

Thank you for the attention

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