2
▪ Traditional Software Testing has transformed ▪ Non-functional and Emerging Technology
into Digital Quality Assurance & Engineering
▪ Key contributing factors are increasing CX
expectations and a leap in digital technology
▪ Quality Assurance is a highly scalable
business as the market for software testing
cuts across industry verticals and technology
horizontals
▪ Worldwide QA industry growth is led by
growth in cloud, digital transformation
spends, proliferation of emerging tech
▪ North America is the most important market
for QA with a ~$19Bn size
▪ BFSI is the largest vertical segment
contributing ~25% of testing spends
▪ Winners In Digital QA are able to deliver
requirements of new-age customers enabled
by cutting-edge technology
2 CX = Customer Experience, QA = Quality Assurance
▪ 2 key segments of players exist in the QA
testing are the high focus, high-growth areas
in NextGen QA
▪ Other high growth areas include DevOps and
automation within testing
▪ Non-functional QA has become critical in
today’s era of digital transformation
▪ Majority of demand comes from the end-
users of applications on areas such as UI /
UX, security, performance and reliability-
under-load
▪ Connected ecosystems / IoT systems (30%+
CAGR), Immersive Tech, Cloud apps (12%
CAGR) are the core emerging technologies
that have high growth potential
ecosystem – competing on a nimble footing
for the NextGen QA market-share
▪ Pure-play QA companies such as Qualitest,
TestingXperts, Quality Kiosk, A1QA, QA
Consultants are capturing a major chunk of
the ‘high-value QA’ market
▪ 61% of IT decision makers are considering
pure-play service providers for QA needs
▪ Companies like TCS, Infosys, Cognizant have
sizeable testing practices and are investing
in NextGen QA solutions
▪ Areas such as emerging technology testing &
automation are assuming high priority within
these organizations
▪ High growth (>20%), High EBITDA profitability
(>30%) are desired financial metrics
▪ Long-standing relationships with US /
Canada enterprise clients is preferred
▪ Higher revenue from specialized non-
functional testing & emerging tech testing
▪ Existence of niche players in the market with
ability to scale through acquisitions and
make rapid strides in NextGen tech
▪ The unique business model of QA that could
lead to high growth & profitability
… are key factors that make it a lucrative
segment for investments & acquisitions
▪ The testing products segment has seen high
fundraising over the last 2 years, buoyed by
increasing number of end use-cases for tools
 ~70

~40 The share of spend on quality assurance was 26% of total IT spend in 2019
is expected to grow to 35% by 2022 owing to growing digital transformation
initiatives like automation, IoT

2021 2030

Several key headwinds are driving market expansion: Demand spotlight on

high-growth areas like connected devices testing, increasing cloud & data More than 85% of organizations are embracing a cloud-first strategy by
analytics needs due to the trend of digital-transformation 2025 and 95% of new digital workloads being deployed on cloud-native
platforms, up from 30% in 2021
Application testing segment accounts for approximately 50% of the
software testing market share in 2021 on account of increasing
investments toward devising robust software for data security and
product safety

BFSI segment accounted for the largest share of ~25% quality

assurance market in 2021 Mounting adoption of AI/ ML, Immersive Tech (AR/VR), Connected
Devices (IoT), Big Data is also enhancing the market for specialized and
North America was the largest market for software testing in
2021 at ~$19Bn premium QA services

5 Source: GM Insights, Nelsonhall, Nasscom

 ▪ A defined, manual activity at the end of the software ▪ Set of processes that incorporate quality
development lifecycle, and was often a bottleneck to throughout the entire product lifecycle
quicker software delivery
▪ Aligns with Agile1 & DevOps2 processes and
speeds up delivery
▪ Used to be a trade-off between “quality” and “speed”
▪ Builds usability much earlier in the
development process, as opposed to finding
▪ Was primarily responsible for functionality of the application usability issues during testing or in production

1960s – 1970s

Advanced testing techniques that

enable business-aligned outcomes:
▪ Need for automated QA emerged after new technologies ▪ Agility: Accelerated delivery is
such as WWW, ERP & CRM were introduced key to quicker release cycles
▪ Quality: High-Quality is the key
▪ A basic level of automation started emerging in standard to cracking the digital CX
software testing ▪ Intelligence: AI/ML is helping in
making testing more reliable
▪ Tools such as Selenium, QTP were introduced for testing
both web & windows-based application

1990s – 2000s

6 Source: Nagarro, KPMG Software Testing Report 2022, Techtarget Report on QE 1. Agile is an iterative approach to software development that delivers value to customers faster 2. DevOps is a set of practices that combine software development and operations
 Significant rise in demand for user-friendly, responsive and Rapidly evolving technology is putting pressure on Testing has evolved from Manual using waterfall approach
secure software has prompted a surge in the requirement of firms to develop quality products quickly and efficiently in the 1980s to Autonomous1 using technologies like
bug-free and error-free environments using highly effective processes such as Agile AI/ML, today

Must Have Key

Technology /
74% of users will abandon a mobile site if it Process Capabilities Necessity To Adopt
takes longer than 5 seconds to load

The digital age will be about use

of ‘Agile+DevOps’ approach
One second delay in page response can result along with continuous testing
in a 7% reduction in conversions Agile + DevOps

With higher client expectations,

1980-1990 2000-2010 The Future
early automation to complement
Waterfall Agile Collaborati
Faced a record $230Mn fine after Agile-DevOps and automation
Methodology Approaches, ve
approach across all QA activities faster Smart
personal details of ~500,000 customers was
Test Automation is a must release Testing
compromised through its system in 2019
cycles
1990-2000 2010-2018
AI can help engineers predict
Many organizations have quality-related costs Experimentation DevOps,
defects instead of detecting, can with Continuous
15-20% of sales revenue,
as high as help build self-healing automation different Testing,
Development CI/CD
some going as high as 40% of total
frameworks, write scripts and
AI-Powered Approaches
operations. Testing analyze data quicker

7 Sources: Software Testing to Digital Quality Assurance, 2019, NASSCOM; Industry Research, American Society for Quality; Nagarro; 1. Autonomous testing is the ability to create tests autonomously without users’ intervention
 PLAN RELEASE

DEPLOY
BUILD

Testing new Testing new Testing every Testing every Testing on

requirements code build deployment production
CODE OPERATE

▪ Shift Left testing focuses on continuous testing in
DevOps, and involves testing at every stage of the
development life-cycle
▪ The goal is to evaluate the quality of the software as a
part of a continuous delivery process by testing early and
often
▪ Key Outcomes:
▪ Quicker releases: Deploying multiple times
a day
▪ Aids security: Keeps application safe from unexpected
changes and attacks
▪ Shift-right testing involves doing more testing in the
immediate pre-release and post-release phases of
application lifecycle
▪ Allows developers to discover new and unexpected
scenarios that have remained undetected in development
environments
▪ Key Outcomes:
▪ Helps gauge and enhance customer experience basis
feedback received from customers
▪ Allows developers to add, delete or change features
based on feedback
▪ AI / ML are helping to prioritize test cases and also
helping in automating maintenance of test code
▪ In the future, AI / ML will also help in analyzing test results
and creating new test cases
▪ Overall testing lifecycle will be shortened due to the
creation of automated scripts
▪ Key Outcomes:
▪ Improved accuracy vis-à-vis manual testing
▪ Faster test creation: Intelligent test recorders help at
creating test scripts faster
▪ Reduces costs & time-to-market

8 Sources: Cigniiti, Tech Target, BrowserStack; CI: Continuous Integration and CD: Continuous Development
 Subset of QC Subset of SDLC

Functional Orientation Functional and Non-Functional Orientation

Validates the product against specification Ensure that processes and procedures are in place to achieve quality

Focus on actual testing of product Focus on process to achieve required quality

End stage of development Across entire SDLC lifecycle

Find and fix defects Prevent defects

Reactive process Proactive process

Testing team Whole development team

Desirable, but not mandatory Value driven and hence a need

End user experience not considered End user experience or feedback key

9 Source: Avendus Research. QC- Quality Control, SDLC- Software Development Lifecycle
 Through Data analytics,
data science and AI/ML
Through adoption of DevOps, Low-code/
No-code platforms and low code
test automation platforms “
To stay ahead in new normal, focus is on strengthening the
quality of software products with QA and focusing on efforts
on testing in Agile and DevOps. At the same time supporting
digital transformations with quality engineering, using AI to
boost QA efficiency.

”
– a1qa

By Building own digital Through adoption of With zero trust architecture

“ Applying AI to quality engineering is a perfect fit.
Just as software becomes increasingly complex, the
companies producing it are under competitive pressure to
increase the speed and frequency of their rollouts. AI is the
only way companies can scale software testing and quality
capability through AI/ML and focus on data/cyber
adoption of cloud security, in compliance with engineering.
and newer regulatory requirements – Norm Merritt, Board Director of Qualitest
technologies

10 Sources: Software Testing to Digital Quality Assurance, 2019, NASSCOM; KPMG-NASSCOM Report on Software Testing, May 2022
 ▪ A new role called Software Development Engineers in Test (SDETs) has been created in the QA industry
QA resources with programming skills are critical contributors
▪ Professionals who can both write code as well as test based on requirements are called SDETs to a QA function / organization
▪ They help improve the code quality by performing strict and detailed source code reviews along with checking for the testability
of the code
Winners in Digital QA are hiring QA professionals and training
them on digital technologies as well as programming skills

Some companies are also crowdsourcing testing to improve

speed-to-market, increase scale, maximize coverage, and to
take care of certain testing use-cases such as localization

▪ Apart from knowledge of testing ▪ Open-source testing is an

“
areas such as Automation approach that is being
testing, proficiency in increasingly adopted by QA
programming languages has practices, as it helps widen the
become a must for a QA Engineer net for bug-catching
80% of the job ads you’d find if searching for
as automation testing involves
▪ It helps improve security of the
jobs in software QA or Test are asking for
thread management, exception
system, as a wider pool of testers
handling, logging, integration with
contribute to it programming skills
DevOps tools
▪ Large bounties are today given to
– Elisabeth Hendrickson of Agile Alliance
▪ Agile methodology has become a promote the open-source testing
must-have knowledge base community

11 Sources: Testtarget, Cigniti, Crowdsprint;

 ▪ The move towards specialized testing is to fulfil rising customer expectations and improve
value realization
46% of users will NOT return to a poorly
▪ Specialized testing is customized for an application while functional testing is the validation of individual performing website
functions which is performed mostly manually or with the assistance of automated tools

▪ Functional testing is getting more commoditized, and the market is shifting towards high
end specialized automated services which have higher realization
40% of people abandon a website that takes
▪ In 2012, 75% of the testing was functional out of which 60% was manual and rest automated more than 3 seconds to load

▪ Specialized testing includes non-functional testing and emerging-technology testing

15-30% of users will abandon a website on

account of bad user experience
Functional Functional
testing testing

Specialized Specialized
Services Services Average B2B company loses $260 Bn due to
poor usability
New New
offerings offerings

13 Source: NASSCOM, Avendus Research. 1. Refers to Indian Market Segmentation

 ▪ Non-functional testing assesses application properties that aren’t critical to ▪ To thrive in today’s fast-changing world of emerging technologies, QA teams
functionality but contribute to the end-user experience need to be up-to-date with the latest technologies and protocols

▪ Performance and reliability-under-load are examples of non-functional ▪ It requires innovative test solutions and automation with a high order of
parameters that make-or-break user experience (UX), which is a critical sophistication and efficiency in testing
parameter for digital applications post the pandemic

Performance AR / VR
Testing
Security AI Systems
Testing
Big Data
User Applications1
Interface
Testing
Usability Cloud-
Testing based
Applications

Distributed
Compatibility Ledger
Testing Technologies
API Testing Connected Devices

14 Source: Everest 1. Includes Ecommerce and social media applications.

 ▪ The goal of performance testing is to identify and Occurs much earlier in the software development
eliminate the performance bottlenecks in the process and seeks to proactively prevent performance
software application problems from the get-go
▪ Helps determine whether the application satisfies
performance requirements (for instance, the ability
of the system to handle many concurrent users
simultaneously) Determines stability, speed, scalability,
▪ Establishes whether the performance levels claimed and responsiveness of an application under a
by a software vendor are accurate: by comparing two given workload
or more systems and identifying the one that
performs best

2.70 ▪ Driven by the growing need for

▪ Deployment of mammoth infrastructure digitalization and rising cloud
Process along with the required manpower
adoption
Challenge ▪ Time consuming-testing and
complexity in coordination
0.90
▪ Rising demand for hardware and
software with better functionalities
▪ Compute Cost was Reduced by 50% and user-friendly interfaces
Outcomes
▪ Business Efficiency increased by 66%
Delivered
▪ Test Execution Time reduced by 99% 2021 2028

15 Source: Microfocus, TestPoint, Dataintelo, TestingXperts, Qualitykiosk, MarketWatch, JavatPoint.

 ▪ Usability Testing also known as User Experience(UX) Testing, measures how easy and user-friendly
a software application is
▪ This is recommended during the initial design phase of SDLC, which gives more visibility on the
expectations of the users
▪ Mainly focuses on the user’s ease of using the application, the flexibility of the application to
handle controls, and the ability of the application to meet its objectives
▪ Compatibility Testing helps check whether the software is capable of running on different
hardware, operating systems, applications, and network environments
▪ Gaining traction due to high fragmentation of hardware and software types which include:
9,000+ (distinct devices), 21 (operating system), 8 (browser engines), 20+ (browser versions)
▪ Increasing relevance as applications are tested across various mobile devices and OS versions for
device compatibility
▪ Common Compatibility Testing Defects include: Differences in user interface concerning look
and feel, changes concerning font size, changes in CSS style and color, issues related to the scroll
bar, the existence of broken tables or frames when viewed in different environments

▪ Verifies behavior and compatibility ▪ Verifies behavior and compatibility of

of developed hardware/ software developed hardware/ software with
with older versions newer versions

6 ▪ Removes Blinders
“ The global Compatibility Testing Service market is estimated to attain noticeable growth
over next 6-7 years, owing to the digital transformation taking place across several
services such as R&D & Testing, IT, Telecom and Internet.

”
▪ Validates Data – Crifax
2 ▪ Provides User insights
▪ Enhances UX
▪ Measures Engagement
2021 2030

16 Source: Data Intelo, Market Watch, KiwiQA, Avendus Research

 ▪ Security Testing helps uncover vulnerabilities in the system and determines that the data and
resources of the system are protected from possible intruders

“
1,862
▪ Attributes covered by security testing include: Authentication, Authorization, Confidentiality,
1,506
Availability, Integrity, Non-Repudiation, and Resilience 1,279
1,175 1,108 Cybercrime is estimated
▪ Areas covered by security testing include System software security, Network security, Server-side 1,385 1,543
to cost $10 Trillion Annually
application security, Client-side application security 1,013 1,084
882 By 2025

– Senior Microsoft India

”
2017 2018 2019 2020 2021 Executive
Data Breaches Sensitive Records Exposed

Security Black Penetration Testing &

Test Plan Box Testing Vulnerability Scanning

37 ▪ Increased sophistication of cyberattacks

and increase in the cost of data breaches

▪ Stringent government regulations have led

6
to increased adoption of security testing
solutions and services
2020 2030

Security Analysis Security White

Box Testing
Black Box &
Vulnerability
Scanning
Impact
Analysis “ By 2025, 60% of firms will list cybersecurity risk as their primary determinant in carrying
out third-party transactions and business engagements.
‒ Gartner

17 Source: Allied Market Research, Globe newswire, Gartner, Deloitte, AustCyber: CSP, Javatpoint, Avendus Research .
 ▪

▪
UI testing helps ensure that all the components on the UI
function as desired

Plays a significant role before an application is released to

of users are less
Content
9%
Lags & Latency
2% “ UI testing is an invaluable tool for
businesses who want to know how people
interact with their websites. Observing and
analyzing these interactions lets you identify
likely to return to a website after Visual issues and deficiencies you may not have
production and helps to identify whether the end-user a bad user experience. 17% noticed otherwise. You’ll also be well informed
interface is running correctly to replace assumptions with real data on the
UX and UI of your app, website, or product.
▪ Helps monitor how the application handles user actions Crash

”
carried out using the keyboard, mouse, and other input 4% ‒ Elementor
Mobile users are Functional
devices
more likely to abandon a task if 68%
▪

“
Provides a wide range of benefits including cost reduction, the website isn’t optimized for
opportunity cost reduction, speed, reproducibility, and mobile
consistency Visual Bugs account for 17% of the total bugs

”
‒ Applause

50 ▪ Increasing need of users for more efficient,

effective, and better customer experience

21 ▪ Explosion of industry-specific applications

that compete for easily accessible user
interface

Visual Design Functionality Usability Performance Compliance 2021 2027

18 Source: Globe newswire, Applause, Avendus Research.

 ▪ API testing aims to determine whether the APIs that are developed meet expectations when it
Push the
comes to functionality, performance, reliability, and security for an application
tests lower Testing Efforts
▪ Helps check whether the output that comes from the first application/database is correct and for higher
ROI
well-structured and useful to another application Automate at the
Workflow
Test feature level
Through the UI

▪ Growth of API economy as API-based applications are more scalable when compared to traditional
API/Service Layer
applications/software, allowing easy integration with other systems Business Rules Automate at the
Functional Test story level

Unit/Component Tests Automate at

(by Programmers) the task level
Ensure the application Ensure easy expansion
can handle the of application
desired load

Ensure the data is

Ensure all the business
passed through API
and in line with
rules have been
5.0
▪ Increasing adoption of agile and DevOps
implemented correctly practices for software development and
Compliance &
at the API level open API strategies
security
▪ Rise in use of AI, ML, and IoT applications
Ensure that the data
Ensures seamless
0.9 ▪ Rapid deployment of technology has
sharing functions and resulted in the formation of complex
application performance
application endpoints structures, necessitating the need for
across all platforms 2021 2030
work as expected improved APIs and their testing

19 Source: Verified Market Research, Katalon, Avendus Research.

 ▪ The goal of Connected Device testing / IoT testing is to ensure their software, hardware, and
firmware work in harmony across every real-world setting - reducing customer complaints and
product returns 6
▪ Such testing comprises practices that involve testing both devices and applications ▪ The number of IoT devices is growing at a
fast clip and will be 80 Bn in 2025
▪ As the number of IoT devices is rising significantly, the need for IoT testing on usability, according to Gartner
performance, and security across platforms, protocols, and devices has arisen 1
▪ The upcoming shift to highly-available and
constantly connected 5G technology will
2021 2027 only increase the need for efficient IoT
testing

Complex Infrastructure: Consists

of diverse elements – such as
▪ Device ▪ Functionality firmware, IoT protocols to be
▪ Embedded Software ▪ User Access Level tested
▪ Responsiveness ▪ Multiple Requests Power Considerations: Multiple Connected Connected Drones Industrial IoT
▪ Error-Phone field systems having low power Home Devices Wearables
specifications

Multitude of Protocols: Different

▪ Device integration
▪ Connectivity
▪ Data transmission
▪ Two-way communication
protocols to connect different
Acquired India-based ZenQ , a pure-play Next-Gen QA company, to
devices
expand capabilities around niche high growth areas in IoT,
▪ Encryption/Decryption connected devices and drone testing
Scalability of System: Creating an
▪ Data consistency
IoT test setup to assess both Cognizant has been investing in its TESBOT robotic solution which
▪ Data validation functionality and scalability is automates testing human-to-machine and machine-to-machine
▪ Data Integration challenging interactions at the physical-digital level for IoT

20 Source: QA test lab, Vebuso, Expert Market Research.

 ▪ Relates to verification of data processing capabilities rather than individual features of big data
applications

▪ Helps organizations to validate information, improve market targeting, and strategizing

▪ Rising prevalence of open-source big data
273
▪ Growing adoption of the Hadoop tool for big data testing owing to its scalability and cost- software frameworks, data connectivity
effective features is further propelling the market growth through hybrid and multi-cloud
163
environments, and digital transformation
strategies are driving the Big Data Market
▪ Rapid adoption of next-generation advanced
analytics solutions with a rising demand for
2021 2026 predictive and prescriptive market

Data collected from various

sources is verified and then
Tester verifies the business
logic at every node and then
Ensures that data is loaded
successfully, and data
“ By 2025, 80% of data analytics initiatives that are focused on business outcomes will be
considered an essential business capability

”
added to the Big Data verify it again at multiple integrity is maintained in the – Gartner
storage system nodes. target system

▪ Unable to manage huge amounts of unstructured data

Process from different data sources and evaluate
Challenge
▪ Existing architecture had quality issues

Data Ingestion Data Data Storage Data Migration Data Loading & Outcomes ▪ 100% data validation and quality control
Testing Processing Testing Testing Throughput Delivered ▪ Over 15% reduction due to automated data validation
Testing Testing

21 Source: Markets and Markets Research, Cigniti, Avendus Research.

 ▪ AI Systems testing covers key aspects of Data Validation, Core Algorithm, Non-functional:
Performance and Security Testing, and Systems Integration Testing

▪ Data explosion has led to an increase in AI-led use cases that understand patterns in data Issues Solution
using complex algorithms thereby fueling the need for robust AI systems ▪ Self-driving car killed a pedestrian as a Aspects of AI systems testing
result of software failure. The car’s that could solve these
▪ AI systems testing involves a fundamental shift from output conformance to input validation to
sensors did detect the victim, but problems:
verify the robustness of AI system
unfortunately did not identify her as a ✓ Data Validation
trigger for applying the brakes
✓ Output Validation
▪ Eminent Social Media website faced
✓ Core Algorithm Testing
glitches while understanding and
interpreting customer preferences and ✓ Data Transformation Testing
▪ Natural Language ▪ Domain Specific Data thereby served wrong recommendations
Processing ▪ Contextual data clusters ✓ System Integration Testing
▪ Image Processing ▪ Data denoising/labelling
▪ ML/ Deep Learning

Process ▪ Need of testing strategy for AI-based application

▪ Human Unbiased testing using statistical modelling technique
▪ Devices Challenge
▪ Decision Analysis
▪ AR/VR ▪ Deployment and
▪ Drones Accessibility Testing ▪ Identified test images data set to comprehensively
Outcomes
▪ Driverless Cars ▪ Location based User do test the claims decision process and helped achieve
testing Delivered client 94% accuracy

22 Source: Gartner, Infosys Insights, Future market insights, Avendus Research, Wipro Holmes, Zion Market Research.
 ▪ Cloud testing is the process of using the cloud computing resources of a third-party service
provider to test software applications
▪ Gaining significant traction because of the speed with which cloud environment is set up
▪ Assesses physical as well as virtual elements such as storage, web application, network
performance, security, scalability, and reliability, interoperability, availability, and multitenancy
testing
▪ AR / VR blends the physical and virtual worlds for the experience to be immersive for the end-user
which gives birth to a new quality paradigm that can’t be programmatically tested
called Immersiveness testing
▪ Increasing prominence propelled by user expectation of immersive experiences in gaming,
healthcare, leisure, retail, e-commerce, travel, and hospitality
▪ AR/VR testing comprises full-stack functionality, compatibility, reliability, usability, security,
maintainability, performance, and a new factor “Immersiveness”

Immersiveness Hardware Accessibility Cross-Platform

Testing Testing Testing Testing

“ “
19 455
More than 85% of organizations
are embracing a cloud-first strategy by Almost 70% of respondents believe
8 2025 and 95% of new digital workloads AR/VR will become mainstream within
being deployed on cloud-native platforms, next five years
up from 30% in 2021 15
– Jabil
– Gartner
2020 2028 2020 2030

23 Source: PR Newswire, Gartner, Jabil, Gartner, Avendus Research.

 ▪ Complexity in DLT testing arises from the necessity to verify the interoperability of nodes in the
network, the existence of a large number of connection permutations between them, and the
need to understand the differences between various permissioning logic Node Size: QA testers leverage blockchain testing tools to see how a block operates if it
▪ Increasing need for DLT testing due to lack of skilled and experienced professionals in developing goes past the maximum size
blockchain, issues linked to lack of standardization due to the complex decentralized architecture
Smart Contract Testing: Helps verify business logic combinations and triggers that lead
to the appropriate execution of specific transactions

Peer/Node Testing: Helps check consistency and flow of transactions

▪ Test case Creation ▪ Smart Contract Testing Node Addition: Helps test each new block that comes in to make sure that there is no
▪ Test Data Creation Report leakage in the block addition system
▪ Environment Setup ▪ Performance testing Report
▪ Performance Metrics ▪ Project Summary Report

“
137

Business value generated by blockchain

will grow rapidly, reaching $176 billion
▪ Understanding ▪ Node Testing by 2025 and $3.1 trillion by 2030
Blockchain Architecture ▪ Integration Testing 3
▪ Full Test Strategy – Gartner
▪ Smart Contract
Designing Testing 2019 2027

24 Source: Gartner, Allied Market Research, Avendus Research.

 “Developers managing ops along with dev
“Change is rapid and Constant”
activities – goal to make it NoOps”
Software SRE
SRE
Engineering

“Tools & Solutions to Remove manual “A journey from reactive to predictive/

Repetitive Ops Tasks” Preventive”

▪ SRE is the process that leverages operations data and software engineering functions to automate IT operations tasks, to accelerate ▪ Robotic process automation (RPA) is the process to automate
software delivery while minimizing IT risk repetitive business processes

▪ Focused on improving software reliability across categories including availability, performance, latency, efficiency & incident response ▪ Wider and adaptive in scope compared to test automation
with a focus on business processes unlike any specific
feature/ test case

▪ Chaos engineering involves
deliberately introducing faulty
scenarios in software to verify
resiliency during disruptions
▪ Helps understand expectations
about what a baseline
looks like
▪ Auto-Remediation involves
rectification capabilities that
correct issues automatically as it
detects them
▪ Next step to chaos engineering
involving “self-healing” features
▪ Key Outcomes:
▪ Facilitates GUI test automation, as the RPA tool can
▪ Error budget tracks the maximum capture repetitive IT system interactions
amount of time a system can fail
▪ Reduces error that occurs during manual testing
or underperform without violating
the contractual terms of SLA ▪ Involvement of RPA makes User Acceptance Testing more
productive and accurate
▪ Helps reconcile the company's
pace of innovation with its service
reliability

25 Sources: IBM, Innovatzglobal, Softbotic, Avendus Research.

 ▪ The movement of the Quality Assurance industry towards automation testing as well as DevOps has created a market need for tools that manage the testing lifecycle efficiently
▪ The expansion of end use-cases for automation – functional testing, regression testing, performance testing, smoke testing, and data-driven testing has led to an influx of specialized automation suites in each
▪ Test Infrastructure providers have been helping reduce investments by service providers in on-premise testing infrastructure, No-Code Low-Code tools have been helping business teams also perform testing
▪ Majority of these product companies are backed by PEs indicating the level of activity in the QA ecosystem where these tools are being used extensively with the advent of automated testing

▪ Useful for all test-related activities such as managing test suites, test runs
ALM
and test results etc

▪ A collection of library functions for developing Test automation suite

▪ No-code test automation tools enable business teams to write and manage
tests without coding skills. These platforms will evolve and widen their scope
with the help of powerful technologies like AI

▪ Test Infrastructure refers to systems/platforms used for carry out the testing,
such as different browsers and mobile devices for compatibility testing

▪ Tools that enable visibility into metrics related to Testing (especially

automation) such as Test runs, Failure rates, Failure types etc

26 Source: Avendus Research.

 ▪ Nimble testing companies using next-gen technologies in areas of AI/ML, RPA, test automation, ▪ Consist of well-diversified global IT services majors which have a large QA and testing services
and Cloud to offer sharp testing services practice with >$1Bn revenue

▪ Well-matured QA practice and wider digital transformation, data, and engineering capabilities

28 Source: Avendus Research.

 Helps react quickly to client needs including, automation testing, manual testing, or a 15%+
hybrid of the two
61% of IT decision-makers are
considering pure-play testing
Benefits coming from a strong network of vendors, systems, and tools that provide a
knowledge base brought in by cross-platform and cross-industry experience coming providers because of their expertise
with knowledge of industry standards and compliance in ensuring good software quality
CAGR 2022-26
Provides global vision of how the software works as they are more focused and unbiased
on multiple software systems and testing procedures

Robust testing cycles for functional and non-functional performance will mitigate
failure rates and reduce maintenance costs. Additionally, it will eliminate HR and ▪ Pure-play providers not only help in meeting quality assurance
management-related costs requirement but also contribute significantly towards improving
the quality and agility of business output
Highly experienced and skilled teams integrated into the projects from the beginning
to end results in a fluid testing cycle which means faster turnaround and a quicker time
to market ▪ 52% of firms employ an integrated approach of establishing in-

“
house testing skills while engaging pure-play providers for
specific functions
The focus on quality and speed of testing capabilities requires dedicated and catered expertise from
their providers. As a result, pure-play providers have the potential to play an important role in
▪ Decision-makers use a hybrid strategy, relying on both
meeting these specialized testing needs
specialist pure-plays for customized knowledge and major

”
– Forrester
▪ System Integrators (SIs) for size and established ecosystems

29 Source: Forrester, Reportlinker, Cigniti.

30 Source: Avendus Research.
 ▪ Wide range of capabilities for clients looking for domain-specific expertise and next-generation testing capabilities
▪ Growing in scale both organically and inorganically by adding and strengthening next-gen testing capabilities 7,000+
▪ Distributed presence across all key industries BFSI, healthcare, travel, retail, media, and entertainment

▪ Offers innovative solutions in the next-generation QE space, digital assurance, service virtualization, AI-based test automation, and platform-led
Quality Engineering
3,000+
▪ Industry Leaders in the BFSI domain by catering to QA/ QE needs of marquee logos in the financial services space
▪ Extended expertise in areas such as RPA, DevOps & SRE, Application monitoring & CX tracking apart from QA

▪ Built 10 accelerators focused on automation testing, non-functional testing, testing of chatbots, DevOps
▪ Increased focus on next-generation Quality Engineering technologies by establishing a Center of Excellence in AI testing, RPA for domain-specific
1,000+
capabilities

▪ Global footprint with business across all major markets, including US, Canada, UK, Netherlands, UAE, Singapore, and India

▪ Scaled player with 1000+ software testing professionals working across various challenging projects on new technologies and domain
1,000+
▪ Gained significant expertise in crowd testing and managed QA services

31 Source: Avendus Research.

 ▪ Delivered 1,500+ projects across a wide set of industries eHealth, eCommerce, telecom, BFSI, M&E, IT and software development, real estate,
utilities, and energy
1000+
▪ Has an In-house QA Academy that helped 1,100+ QA specialists sharpen professional skills within 10+ CoEs and R&D labs

▪ Specialized play with a Test automation framework Tenjin Enterprise and Tenjin Online’ for codeless test automation
500+
▪ Significant expertise in the BFSI domain by catering to the QA needs of marquee names in the banking space

▪ Strong foothold in Next-gen testing services including connected devices testing, AI/ML powered testing, AR-VR testing, and IoT testing
▪ Had setup an emerging technologies practice focused on quality engineering solutions for connected and autonomous vehicles, artificial 350+
intelligence (AI), Internet of Things (IoT), and blockchain

▪ Specialized in digital transformation testing having built a unified test automation framework across web, mobile apps, APIs & web-services and
data pipelines
300+
▪ Strong focus on emerging testing capabilities including AI/ ML, Internet of Things (IoT), big data, and blockchain testing
▪ Strong domain-level expertise in verticals like E-commerce, fintech, and SaaS

32 Source: Avendus Research.

 ▪ Offers a balanced portfolio of services across QA advisory, functional, non-functional testing, automation, agile and
DevOps testing
200+
▪ Emerging technologies practice focuses on quality engineering solutions for connected and autonomous vehicles, artificial intelligence (AI), Internet
of Things (IoT), and blockchain

▪ Focused on enterprise application testing, which is one of the cornerstones of digital transformation
▪ Next gen testing capabilities include IoT testing: (smart watches, car infotainment systems, smart bulbs), testing
200+
chatbots using AI

▪ Strong domain-level expertise across Insurance, Healthcare, and Technology space with marquee fortune 500 clients

▪ Specialized in niche areas including testing of print system testing, 3D Printer testing, Fax over IP testing, and Smart
grid testing 150+
▪ Strong foothold in North America with clients ranging from Media and Entertainment to Healthcare

▪ Carved its niche in test automation services with most of the Fortune 500 and mid-sized companies as their clients
100+
▪ Strong geographical presence in North America across all verticals including BFSI, Defence, Public Services, Healthcare, Energy, and Manufacturing

33 Source: Avendus Research.

 ▪ One Automation Ecosystem (OAE): Aggregates TCS' next-gen record-and-
playback (ScriptBot), MBT, and testing framework capabilities into one
central tool for automating the creation of test artifacts that are integrated ▪ Automation with AI: Developed several AI use cases. Amongst the first firm
and interoperable to have combined them with its continuous testing platform, as part of 45,000+
▪ SmartQE Platform: Operates intelligent, machine-led platform that can test Smart QE (CY20)
AI applications and help infuse AI for testing purposes with new offerings ▪ Mobile Testing: Comprehensive offering backed by many IPs
such as test data and environment management, release orchestration, and
▪ UX Testing: Comprehensive offerings, backed by its CX Assurance Platform
test suite optimization

▪ AI-Based Quality Assurance Automation: Increased focus on AI to

automate testing and validate chatbots and AI models for the analysis of ▪ Continuous Testing: Shifted from the TCoE model to a more decentralized
past test cases and defects that predict where to test based on code delivery structure bringing in quality engineering focus, more aligned with 28,000+
changes in new software development teams
(CY20)
▪ AI and RPA Testing: Within cognitive technologies, chatbot testing has
▪ Digital Technology Testing: Increased investment in UX testing including become a significant activity
crowd testing, chatbot testing on account of increasing functionalities within ▪ Digital Technologies Testing: IoT/connected products testing, low-
AR/VR, computer vision testing to check the quality of scanned documents code/no-code testing

▪ LitmusT: Aggregated its automation IP, capabilities including ( Functional

test execution in the context of agile/continuous testing, MBT) and
▪ AI-based Automation: Focused on AI-based automation with a next-gen 12,400
accelerators around the LitmusT brand
record-and-playback tool (CY21)
▪ Magix: Developed core platform that is the central point for aggregating all
accelerators and IP with a systematic approach to test automation beyond ▪ AI-based Analytics: AI use cases offering is developed with a dual approach
test execution with model-based testing and test data management based on the Cha.AI and eAnalytics IP

34 Source: Annual Reports, NelsonHall

 ▪ AI testing: Developing AI use cases for automated testing services, beyond
analytics-centric use cases. Eg: Adapt, to further shorten automated test
creation and maintenance, ADA around synthetic data creation ▪ UX testing: Active in UX testing activities with Digi Assure including end-user 27,500+
research, UX testing, and product design (CY21)
▪ Focusing on investment in Driving Automation Systems Validation (DASV) for
▪ RPA testing: Active in deploying RPA for testing purposes
testing autopilots in vehicles

▪ Demonstrated continuous innovation and significant shift towards quality ▪ Leveraging ML and NLP to enable intelligent test design automation for
engineering for business through AI-/ML-driven bots, codeless platforms, business process testing and generating automation test scripts NA
and AI-infused accelerators ▪ Automated connected-device testing: Has created a tool called TESBOT to
test for interoperability between firmware, devices, and OS

35 Source: Annual Reports, NelsonHall, Forrester

 High
Cognizant
Leaders
(Measures Impact Created In The Market)

Wipro
HCL Technologies TCS Accenture
Major Contenders IBM
Capgemini Infosys
DXC Technology
LTI
EPAM
Qualitest
Virtusa Tech Mahindra
Softtek Infogain
Cigniti Atos
UST Mindtree
Cybage Tavant QualityKiosk
ValueLabs
Mphasis Zensar
Sonata Software Aspire TestingXperts
Jade Global Systems
QA Consultants
Mastek
TO THE NEW
Low Aspirants
Low Leaders Major Contenders Aspirants Aspirants High

(Measures Ability o deliver services successfully)

▪ Focusing more on talent upskilling and adding next-
generation QA services in the portfolio
▪ Transitioning from Aspirants to Contenders will require
more strategic partnerships to expand across depth and
breadth of services
▪ Contenders are a mix of end-to-end QA service providers,
digital engineering firms, and independent QA service
providers
▪ Actively investing in next-generation services like drone
testing, connected devices testing by building capabilities
or through smaller tuck-in acquisitions
▪ Leaders include larger Sis backed by technical expertise
and co-innovation efforts through continued investment in
technology & talent development
▪ Stiff competition from contenders due to active
investment in next-gen quality engineering

36 Sources: Everest
 ▪ Revenue growth >20% ▪ Enterprise preferred to mid-tier ▪ Higher share of specialized testing revenue – test
automation, security testing, performance testing,
▪ EBITDA margin >30% ▪ Long-standing relationships preferred
mobile testing, Big Data and IoT testing
▪ High visibility into revenue though Signed Contracts ▪ High spend client across BFSI, Hi-Tech preferred
▪ Revenue from testing of emerging areas like AI,
(SoWs) and multi year MSAs
Cloud

▪ Command on various open-source as well as

proprietary testing tools

▪ US/Canada deemed most attractive given the
depth of market and size/breadth of client
accounts
▪ Developed markets-focus is the next
top priority
▪ Repeat/recurring revenue preferred to project- ▪ Technology IP and proprietary data are key
based revenue differentiators
▪ Managed services help increase wallet share ▪ Impact on valuation higher if IP is monetized
and revenue visibility

▪ Scaled presence in each geography attractive

38 Source: Avendus Research.

 Target Employee Deal Size
Date Target Acquirer Target Description Size ($Mn) LTM EV/Rev LTM EV/EBITDA

▪ India based specialized provider of automated IT

Oct 2022 500+ NA NA NA
Series A (Fundraise) testing solutions

Sep 2022 ▪ US-based global QA and software engineering company 600 NA NA NA

▪ France based digital testing and quality assurance

Sep 2022 company engaged in testing of digital systems, devices ~600 220 NA NA
Digital Testing and cyber security

▪ Indian software testing and quality assurance company

Aug 2022 600+ NA NA NA
engaged in next-gen testing services

▪ New Zealand based quality assurance company

Jul 2022 250 NA NA NA
engaged in software testing

▪ US-based software testing and quality assurance

Feb 2022 120 NA NA NA
company

▪ US Based Digital engineering quality assurance

Dec 2021 300 $105 ~2.4x NA
provider

▪ Testing specialist with Functional, performance and

Jul 2021 50+ 12 3.4x 37.9x
security software testing capabilities

39 Sources: MergerMarket, Avendus Estimates.

 Target Employee Deal Size
Date Target Acquirer Target Description Size ($Mn) LTM EV/Rev LTM EV/EBITDA

▪ Finland-based QA and software testing automation

Jun 2021 100 NA NA NA
company

Mar 2021 ▪ Australia based provider of software testing services 1,300 300 NA NA

Feb 2021 ▪ India-based software testing services company 1,000 NA NA NA

▪ Romania-based company specialized in quality

Nov 2020 390 6 NA NA
assurance for gaming and applications

▪ UK based provider of software testing and quality

Oct 2020 250 NA NA NA
assurance services

▪ US based company engaged in software testing and

Jul 2019 3,000 437 2.1x NA
quality assurance

▪ Netherlands based software testing and quality

Jul 2019 200 NA NA NA
assurance player

▪ Germany-based provider of software testing and

Dec 2017 1,800 396 1.1x 11.2x
quality management services

40 Sources: MergerMarket, Avendus Estimates.

 Acquired
by

Acquisition to acquire Acquisition to extend Acquisition to expand One of the largest QA Acquisition to expand Acquisition to expand global Acquisition to expand
capabilities in niche geographic footprint to quality engineering and offshore assets based quality assurance organizational presence in Quality Assurance
high-growth areas DACH market and digital engineering out of India. Acquisition presence specifically in India coupled with adding capabilities in New
including blockchain expanded capabilities in footprint across the to expand global right- Pharma and Digital existing services including Zealand and strengthen
testing, connected digital engineering and legal industry shoring quality Healthcare verticals functional, automation, and its presence in ANZ
devices testing cyber security assurance offerings performance testing services region

41 Source: MergerMarket
 Acquirer/Investor Target Target Description

Deal size: NA
▪ Cloud-hosted, web and mobile application automated testing
Jun’22 platform company

Deal size: NA
▪ US based provider of Next Generation Test Automation Software (Visual test
May’21 automation software)

Deal size: NA
▪ Cloud-hosted, web and mobile application automated testing
TPG – Mar’21 platform company
Riverwood - Mar’19

EV: $1,700Mn
▪ Delivers tools for application performance monitoring, software development,
software testing, API testing and API management
Oct’20

Deal size: NA
▪ Quality platform designed for Agile Testing and DevOps Teams
Aug’20

Deal size: $330Mn

▪ Global digital test automation and monitoring software provider
Jun’20

Deal size: $1,150Mn

▪ Leading provider in next-generation application security testing
Mar’20

Deal size: $950Mn

▪ Delivers the application security solutions and services
Nov’18

42 Source: MergerMarket
 ✓ QA has already undergone a transformation due to CX requirements and a quantum leap in technology

✓ Testing is left-shifting, involves more of AI/ML and more of continuous testing to support CI / CD

✓ AI / ML will take the lead in software testing ✓ User-centered QA and CX will be a huge trend
✓ Automation will flourish even more ✓ Security testing will demand attention in the next two years

✓ Focus of winners will be on flexibility, market data analytics, predicting customer behavior, speed and Time-to-market, security
✓ Pure-play vendors will emerge as market leaders, charged by next-gen technology capabilities, delivering a diversified set of offerings & top-of-the-line economics

✓ Need for QA specialists with programming skills is at an all-time high and set to increase

✓ Winners will continue to invest in high-growth segments such as emerging technology and non-functional testing which have 15%+ growth rates

✓ Winners are focusing on developing IP in the form of frameworks & accelerators across the testing spectrum mainly prompted by needs of automation and DevOps

✓ Quality Assurance is a highly scalable business as the market for software testing cuts across industry verticals and technology horizontals
✓ Business model of testing companies continues to allow for high growth & EBITDA profitability which makes it a lucrative sector

44 Source: Wolf Careers, Avendus Research

 Enterprise Technology & Services Vertical

Email: Shobhit.jain@avendus.com Email: nihar.akunuri@avendus.com

Mobile: +91 99876 02930 Mobile: + 91 9321822506

Email: Abhinav.doomra@avendus.com Email: Rohit.rathi@avendus.com

Mobile: +91 99105 40549 Mobile: +91 82639 76099

45 Source: MergerMarket
 ▪ World’s largest pure play testing services company focusing on AI-powered quality assurance and quality engineering services
▪ Backed by Bridgepoint, a leading global PE firm with USD 40 Billion in AUM
▪ Service delivery platform spans US, UK, Israel, Romania, and India
▪ 17 years of robust experience in providing quality engineering enabled
software testing services to product companies
▪ One of the largest independent offshore testing companies with long standing
relationship with clients in the eLearning and publishing verticals
▪ Global delivery footprint spread across India and US
▪ Positioned QA Infotech as a pure-play offshore QE services provider with
strong test automation capabilities and a pedigree of marquee, long term
client relationships
▪ Helped arrive at the right structure for the transaction with two legs – India & US
▪ Navigated the cross-border transaction amid global lockdown. Conducted
management meetings in Dubai in Nov’20 to expedite the process
46 Source: Avendus Research.
▪ 18+ years of experience in experience in delivery end-to-end testing services
▪ Exposure to software dev. in web, mobile & cloud in existing client accounts
▪ High domain expertise in verticals- BFSI, Healthcare, Retail, Education & Tech
▪ Focus on IP-creation with Centers of Excellence (CoE) in various Next Gen
testing services
▪ Positioned ZenQ as a must-have asset providing Next Gen QA services such
as Blockchain, IoT, Big Data and drone technologies testing
▪ Negotiated transaction structure & definitive docs to ensure efficient
outcomes for sellers
▪ Helped negotiate key governance principles and conducted management
meetings between the parties for an efficient integration
Avendus Client
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