Saturday, March 15, 2008

Software Testing Assessment and Forecast

There is an interesting report out from NelsonHall on software testing. For a summary overview you can visit Earth Times

Some of the key findings it highlights nclude:

  • Specialist testing spending accounts for c. 20% of total testing spending and is happening in majority by U.S. and U.K. clients in the financial services industries and telecom. Demand is spreading across other countries such as the Netherlands, Australia/New Zealand and Nordics to sectors such as energy and utilities.
  • Clients are primarily adopting specialist testing services to achieve cost savings by at least 10% and to improve the quality of their software. However, external factors such as mergers and acquisitions, compliance and industry deregulation are leading clients to engage into new software development and therefore, in additional testing activities.
  • Specialist testing is typically sourced offshore by U.S. and to a lesser degree by U.K. companies. Clients in Continental Europe have used a different approach that is less dependent on labour arbitrage, relying more on best practices and methodologies.
  • A small majority of companies across the world still favour on-site delivery (staff augmentation), whether it is from offshore resources or from onshore staff. Nevertheless, demand is clearly moving towards work delivery from software testing factories both from onshore and low cost countries.
  • Companies predominantly purchase specialist testing services on a professional services basis in the form of time and material or fixed price projects. They are keeping ownership of their contracts and are not yet likely to award full responsibility of testing to a third party.
  • Managed testing services ("outsourcing") contracts are the exception in terms of number. However, they command high TCVs. Typically, most managed services contracts rely on SLAs such as timelines and headcount ramp up objectives that are relatively easy to measure. Clients and vendors are pushing towards productivity-based SLAs such as number of test scripts executed in one day. Managed testing services contracts with SLAs based on software quality commitment are very rare.
  • Clients purchase in majority (c. 55%) specialist testing services from onshore IT services vendors and (c. 35%) from offshore and nearshore IT services vendors. Testing pure-plays catch c. 9% of total spending.