Software Testing Market India

Transcription

1 Software Testing Market India July 2014

2 Executive Summary Market Software Testing market in India was valued at ~ INR xx bn in 20-- and is projected to grow at a CAGR of ~ x1% between 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 Drivers & Challenges Trends 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 Need for Mobile Application Testing Challenges Dearth of Required Skill Competition with Other Countries Role and importance of IP Led Testing Major Players Competition Company A Company B Company C Company D Company E Company F 2

3 Macroeconomic Indicators Introduction Market Overview Types and Benefits Drivers and Challenges Software Testing in Key Sectors Trends Competitive Landscape Opportunity and Recommendation Appendix 3

4 Economic Indicators (1/3) GDP at Factor Cost: Quarterly INR tn d1 c1 b1 d2 c2 b2 c3 b3 a3 c4 b4 a4 12 a1 a2 11 Q1 Q2 Q3 Q Inflation Rate: Monthly % 2 1 p q r s t Jul Aug 2013 Aug Sep 2013 Sep Oct 2013 Oct Nov 2013 Nov Dec

5 IT Industry - Segmentation SAMPLE IT Industry Software IT Services ITeS- BPO Hardware Software Products Engineering and R& D services Project Oriented Services IT Outsourcin g Training and Support Training and Support Infrastructure Software Enterprise Application Software Focus of the report 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 Training and Support Training and Support Training and Support 5

6 India- The preferred destination for SAMPLE 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 a1% of US-based companies have voted for India as their first and most preferred choice for software outsourcing 6

7 and the largest pool of skilled resources SAMPLE 7

8 Increased number of software development companies are outsourcing their software testing work to India Software Testing Market Size and Growth Segment A Segment B INR bn d1 X1% s1 m1 x1 a1 b1 p1 q1 y1 n1 t1 e1 c1 r1 z1 o1 u1 f e 20--e 20--e 20--e 20--e Note: Market size includes Export Revenue earned by India from outsourced software testing service and Revenue earned from domestic software testing service 8

9 Software Testing Market Segmentation SAMPLE Software Testing Market In-house In-house Testing Testing Outsourced Testing Services Services Services In-house Testing Services Outsourced Testing Services 9

10 Independent testing services are more in demand as compared to Traditional testing services X1% A Segment B segment X1% Y1% Y1% 10

11 Drivers & Challenges Summary Drivers Dominance of IT Service Sector Growing Acceptance Among Customers Rapid Evolution of Vendor Capabilities Challenges Dearth of Required Skill Competition from Other Countries Unique Growth Strategies Government Initiatives 11

12 Established IT services sector in India facilitates the growth of the Indian software testing market Dominance of IT Service Sector Impact 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 Share in A Market Share in B Market a1% b1% Segment 1 Segment 2 a1% b1% Segment 1 Segment 2 Growth in IT Services Sector - India INR bn a1 b1 c1 x1% d1 e1 f1 g e 20--e 20--e 20--e 20--e 20--e 12

13 Indian software testing market will witness further growth owing to the recent government initiatives Government Initiatives Impact 13

14 Rising competition from other low cost nations poses a threat to India s dominance in the testing industry Competition from Other Countries Western companies find it profitable to outsource their software development and testing work to countries where cost of human resources is much lower Impact It reduces development and production cost Reasons 14

15 Software Testing in Key Sectors (1/6) SAMPLE Software Testing in Sector A Owing to 15

16 Software Testing in Key Sectors (2/6) Software Testing in Sector A Case Study Vendor Client ABC Ltd XYZ Requirement Solution Benefits 16

17 Trends Summary SAMPLE Need for Mobile Application Testing Shift towards Cloud based Testing Key Trends ` 17

18 Porter s Five Forces SAMPLE Analysis Impact High xxx Threat of New Entrants Impact Medium to High Impact Medium Impact Medium Bargaining Power of Suppliers xxx xxx Competitive Rivalry Bargaining Power of Buyers xxx Impact Low to Medium xxx Threat of Substitutes 18

19 Competitive Benchmarking (1/5) Public Trading Comparables (FY 2013) SAMPLE 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 --/-/

20 Competitive Benchmarking SAMPLE (x/x) Key Ratios of 3 Major Companies Operational Basis (FY 2013) (x/x) % Operating Margin Net Margin 40 A B C E F 0-10 D xxx xxx xxx xxx 20

21 Competitive Benchmarking SAMPLE (x/x) Key Ratios of 3 Major Companies Operational Basis (FY 2013) (x/x) Return on Equity Return on Capital Employed Current Ratio % A xxx B C xxx D E xxx F G xxx H xxx Y xxx xxx 21

22 Competitive Benchmarking SAMPLE (x/x) Key Ratios of 3 Major Companies Operational Basis (FY 2013) (x/x) Asset Turnover Ratio A1 A2 A xxx xxx xxx xxx 22

23 Public: Domestic Company Company A (1/4) Company Information Offices and Centres India Corporate Address Tel No. Fax No. Website Year of Incorporation Ticker Symbol Stock Exchange New Delhi Products and Services Head Office Category Electrical components Equipment Products/Services Key People Name Person 1 Designation Chairman Person 2 Managing Director Person 3 Director Person 4 Additional Director 23

24 Public: Domestic Company Company A (2/4) Financial Snapshot INR mn x4 x3 x2 x1 x a2 a Total Income 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 b2 b Indicators Market Capitalization (INR mn) Total Enterprise Value (INR mn) EPS (INR) PE Ratio (Absolute) Net Profit/Loss c2 c1 c d2 d Value (dd/mm/yyyy) INR mn y4 y3 y2 y1 y Key Ratios Particulars 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 y-o-y change ( ) Improved Decline 24

25 Public: Domestic Company Company A (3/4) Key Business Segments Key Geographic Segments Segment 1 Segment 2 Segment 3 Region 1 x2 x1 x a1% b1% c1% a2% b2% c2% a3% b3% c3% a4% b4% c4% x2 x1 x 100% Region 1 is the only geographic segment in which the company has been operating for the past five years Business Highlights Description Overview Collaborations Expansion Plans News 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 certification Company A collaborated with Company 3 for manufacturing of diesel generators with Company 3 brand of Engines The group is planning to diversify and enter the IT industry 25

26 Public-Domestic Company: Company A SWOT Analysis (4/4) S W O T 26

27 Private-Domestic Company: Company B. (1/5) Company Information Offices and Centres India Corporate Address Tel No. Fax No. Website Year of Incorporation Mumbai Head Office Products and Services Category Products Products/Services Key People Name Person 1 Person 2 Person 3 Designation Chief Financial Officer Head of Project Whole Time Director 27

28 Private-Domestic: Company B. Shareholding Pattern (2/5) Ownership Structure X segment Y segment X% Y% Note: Shareholding pattern as on AGM dated 29 th Sep

29 Private: Domestic Company Company B (3/5) Financial Snapshot INR mn x3 x2 x1 x a2 a Total Income Financial Summary b2 b Net Profit/Loss 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-- c2 c d2 d INR mn y4 y3 y2 y1 y Key Ratios Particulars 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 y-o-y change (20 --) Improved Decline 29

30 Private-Domestic Company: Company B (4/5) Key Information Description Details Company B provides passive telecommunication infrastructure in India It was formerly known as Company B1. and it operates as a subsidiary of B3 Overview 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 noncommunications customers under long-term contracts 30

31 Private-Domestic Company: Company B SWOT Analysis (5/5) S W O T 31

32 Opportunities (1/2) Opportunities in Testing Market in India E A R L I E R ~ abc mn N O W ~ xyz mn 32

33 Opportunities in IT Hubs in India Mumbai X Y 33

34 Strategic Recommendations Recommendations for Vendors 34

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