The most quoted statistic in the Software Testing Industry - and I mean consulting firms offering outsourced software testing as a service offering - is the US Department of Commerce NIST study from 2002. This study claimed that inadequate software testing costed the US some $60 billion in direct and indirect costs i.e. there were nearly $38 billion of preventable losses provided there were adequate investments in software testing.

The year 2000 is when the outsourced software testing industry really took off in India with many pureplays recognizing the market potential and hiving off new business units that focused almost entirely on this market "white space". Today one might claim, this industry is nearly 8 years old, not quite a toddler and certainly more refined that it started off.

2002 was when I got the chance to build such a software testing business unit from scratch. The very concept of stepping out of the shadows and being perceived as "development support staff" to being a locus of revenue generation was all the motivation I needed. Spending over 6 years creating, running and building a professional services practice in the Software Testing space gave me a few insights in to the current state and future of this industry, which is what I hope to talk about in this blog over the next few posts.

The industry is now fragmented into four broad kinds of companies, some which have added software testing services to complete their services bouquets and others that depend only on this as a primary source of revenue.

Here's the Who's Who:

- The Big Six: Consists of the pureplay Indian vendors - monikered as the SWITCH (Satyam, Wipro, Infosys, TCS, Cognizant and HCL). Some of these companies have bigger practices that are consolidated across domains, while others have a smaller, me-too practices.

The serious three are Wipro - who claim to be the world's largest independent testing practice, Cognizant and Infosys. Between the three, they easily clock around ~$900m to over a billion dollars in Testing Services. Typical size ranges between 2000 to 9000 dedicated employees.

- The Mid-Tier Domain-led Pureplays: This segment includes the other smaller pureplay vendors with sub-3000 headcounts.  Here we find Polaris, Birlasoft etc. These companies are usually focused on a couple of domains e.g. Financial Services, Media, Telecom etc.

- Dedicated Pureplays: There are certain companies that have chosen to have testing services as their primary offering. Why this is particularly audacious, is because this is an area where revenues weren't guaranteed to  be perennial and talent was at a premium. The crowd here is mostly AppLabs, Maverick, AztecSoft etc.

- The Globals: A lot of global consulting firms realized the value in consolidation. This includes Accenture, Capgemini, HP (with the EDS piece) and IBM. Some of these globals don't have the ability to weave together all their capabilities in disparate geographies under one roof and market that as a testing service. Sooner or later, this will start to happen.

You will notice that my list seems to be India-centric and of course, I will freely admit that this is the competitive spectrum that I have addressed more than others. There are geography leaders e.g. SQS in Germany and the UK, Orasi in the US, Polteq in the NL which satisfies a niche in Assessment Consulting. This I promise to cover in a more structured format.

Once we have understood the market, I will attempt to address the issue of competitive differentiation.