Aspire for the actual

Kishore Kumar

HYDERABAD:  AppLabs Technologies is undertaking a study to gauge what it calls the actual market size of the overall software testing industry.

“Nobody seems to have done a full market sizing for independent testing services. We are in the process of commissioning an analyst firm to undertake this analysis on our behalf,” disclosed Adam Ripley, senior vice president, AppLabs Technologies. “I think the actual market that’s being addressed is a small fragment of the overall market.’’

To justify his assessment, Ripley said that self-serviced activities form the bulk of the business. “Majority of the market is purely self-serviced where companies who do their own testing or they do it as part of a project. With companies like Wipro and Infosys having now separated their testing services, it looks like most of the revenue accounted is from in-house projects.’’

Ripley said that the approach of having software testing performed on basis, which is less formally structured and undertaken by the in-house staff, software developer or packaged software supplier does not achieve the correct level of objectivity.

However, AppLabs has come out with its own figure of the overall market size by mixing the IDC report and its own estimation. Its result puts the market size at $54 billion in 2007, with the prospect of being increased to $63 billion by 2010.

“How I got that is by looking at the IDC market sizing and then looking at the areas where testing is applicable and then putting a modest 20 per cent cost on those elements,’’ said Ripley.

AppLabs applied 20 per cent spent on testing activities in categories like Systems Integration, Custom, Application Development, IS Outsourcing and Software Deployment and Support.

The total value of worldwide spending in these categories in 2007 is estimated at $271 billion increasing to $313 billion in 2010.

IDC forecast the total worldwide spending for external IT related services is expected to reach $711 billion in 2007 and grow to $868 billion by 2010. The estimated CAGR is around 7 per cent.

According to the majority of industry analysts, testing activities account for between 25 per cent and 50 per cent of expenditure of an IT project.

A Gartner report had estimated the testing services business to become $13 billion by 2010. Analysts expect around $6.1 billion to be outsourced. India is expected to corner a 70 per cent share of around $4 billion, as against around a billion dollars in 2007.

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