ReIQ: Queued For Growth

RelQ, which claims to have now perfected the art of
offshore testing, will double its headcount in the next six months from its
present strength of 550 and invest $3 mn in the development of infrastructure
and test labs. Worldwide, the testing market is estimated at around $15 bn and
the global outsourcing testing market opportunity for 2006 has been pegged at
$5.5 bn. Of this, nearly $4 bn is expected to be offshored to cost effective
destinations-the India pie could be as much as 50% of the total outsourced
basket.

The outlook for independent testing, validation, and
verification companies looks brighter too with the CAGR for the independent
outsourced testing market estimated at over 60%. Companies such as RelQ are
therefore looking at increasing its wallet share within their existing Fortune
100 clients and capitalize on new areas such as game testing by building test
factories and experimenting with new service models. At the moment, 15% of the
company's business comes from game testing and going forward, it intends to
build a number of game testing labs in newer facilities. It has 12 offshore test
centers currently.

RelQ is also sharpening skills in test technology and tools
in enterprise embedded software domains. The last two years, said company
officials, saw good demand for test automation services (that's where they get
30% of the business), which has now made the company plan an automation lab.
This is encouraging news, particularly when one learns about the usual problems
associated with automation. One, licenses are too far expensive. Two, customers
and some development teams have a misconception-automating is easy and
inexpensive-it is inexpensive to run, but one can't automate till the manual
testing is perfected.  The initial
effort is also very high and RelQ says it has 100 people working on automation
itself. The customer buys licenses and testing companies use whatever tools are
given to them. Problem could also be when small customers may be unwilling to
invest too much money on licenses.

But, while battling small testing projects-if a
development project is a one-year one for example, the testing part of it will
be four to five months-and scaling up problems, RelQ says, it is determined to
demonstrate that it is possible to build a $500 mn company in testing alone.
Right now, it is a $22 mn company and wants to grow to $50 mn in another two
years. In merger talks till about a year ago, the company will now continue to
grow on its own, co-founder and president Dr Prakash Mutalik said.

“In all the accounts that we are dealing with, we have
not encountered any of the large players till today. Secondly, the market is
opening so much, that if I had another 400 people today, I would have business
for them,” says Dr Mutalik.  Most
of his clients, he said, prefer dealing with independent companies as clients
feel that if the testing job is given to the same people who have developed the
software, they wouldn't be able to do an unbiased job.

Goutam Das in Bangalore

goutamd@cybermedia.co.in