India may become software testing hub

Software bugs or errors cost the US economy an estimated $ 59.5 billion annually, which is equivalent to 0.6 per cent of its gross domestic product. This loss is borne by users and developers of software. At least a third of this cost can be saved through better quality and timely software testing.
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In India, the market for IT-related services is estimated to reach the $20-billion mark next year. Reported software testing revenues form 1-2 per cent of this figure. Ideally, 20-30 per cent of the software development life-cycle (SDLC) should be dedicated to software testing. In today's business, this will empower companies with huge cost advantages, where cost-control and value-creation are paramount. Independent software testing players spotted this huge potential almost six years ago.
Sensing the opportunities in this emerging space, most of the top ten IT companies in India created independent testing practices in-house. Leading IT companies now position testing as a standalone service and often find it an easier route to gain entry into new accounts for offshoring services. Revenues from testing services are poised to grow exponentially over the next five years. The following trends are fuelling this growth:
Worldwide, CIOs (chief information officers) are under pressure to increase the ROI (return-on-investment) on their IT investments.
At the organisational level, most institutions in the developed world have realised that their survival depend on how effectively they can cut operational costs while improving the service standards to their constituents. IT outsourcing, and subsequently, offshoring have been the answer to these challenges.
One out of every four companies is now outsourcing an IT function. In 2003, Europe witnessed an 87 per cent jump in outsourcing. Independent testing from an early stage in the SDLC is seen as an effective way to mitigate the risks of outsourcing.
Project time-lines and budgets are crashing. By the time projects come to the testing stage, over 50 per cent would be staring at unreasonable deadlines to go live. Users and providers of technology recognise that independent testing companies can bring down testing costs and time-lines significantly. Outsourcing software testing can cut costs significantly, improve quality and lower risks.
Vertical-specific legal and regulatory frameworks are becoming more stringent. In terms of technology absorption, the leading verticals have been banking, financial services and health-care. These verticals have witnessed the tightening of regulatory norms, which has meant significant investment in technology.
HIPAA (for health care), BASEL II, SOX, anti-money laundering (on the banking and financial services) have been on top of the list. Even in the domestic market, the Reserve Bank of India has led the charge with implementation of an RTGS (Real Time Gross Settlement) system, which has set the pace for banks to increase significantly their technology deployment.
Technology sourcing strategies are more complex. Multiple vendors working on engagements are common because business requirements are more complex today.
It is common to find banks with more than a hundred bought out applications, which are all integrated and drawing upon one another. With software getting more integrated within and outside the organisation, it is increasing the dependence on the same for all business decisions.
Defects could result in both financial and non-financial (image, response time and so on) setbacks. In industries such as banking, where money is business and managing risks is critical, the effect of software defects can be disastrous. Independent testing is increasingly giving that additional assurance to clients.
Increasingly users of technology are non-technical and, therefore, their tolerance for poor quality is low. The quality of application going into production has become a key determinant of the evaluation of CIOs. The questions that need immediate answers are: If the new solution is improving the life of the business user? Is the solution making him more productive in delivering his role? Is it making the customer's life easier?
With these developments, testing is increasingly being seen as a specialised service. The presence of sound testing service providers in offshore locations, such as India, will help global corporates mitigate risks associated with offshoring. Today, testing is attracting better quality talent.
Five years ago, testing was seen as a poor cousin to development. Today, both billing rates and compensation levels of testing professionals are comparable, if not better, than programming professional.
Testing requires a thorough knowledge of the business process in the segment and of the testing process and methodology. Even a moderately skilled resource that fits this description is scarce. Offshore destinations, such as India, have a large pool of human resource that can be turned into high quality testing professionals.
Lack of training academies that focus on testing is a serious issue today. Twenty years ago there were training institutes for computing languages. Knowledge of the SDLC and programming languages have now found their way into school and college curricula.
Testing is yet to get the attention of academic institutions. Given the promising rate of growth in testing that took over the last few years, the next five years will see more specialised programmes around software testing which would further strengthen the position of software testing as a sound career option.
A sound independent software testing industry will, in turn, give additional assurance to clients to outsource from and offshore to India.