The Smart Techie was renamed Siliconindia India Edition starting Feb 2012 to continue the nearly two decade track record of excellence of our US edition.

Numero Uno Testing Pros

Vidya Balakrishnan
Tuesday, May 29, 2007
Vidya Balakrishnan
Sashi Reddi’s look is unfazed of the professional listeners. His face contains a boyish grin as he walks to the podium and poses in front of the camera and media in a Mumbai press conference. Shuffling through some last minute papers, his tone takes over the din of the crowd. Resounding over the mike, the Founder and CEO of Hyderabad-based AppLabs Technologies announces his $37 million acquisition of U.K. based testing firm IS Integration, thereby declaring himself as the largest independent global software testing providers in the world. This acquisition is unique for an Indian IT service firm considering AppLabs was buying a company that had much larger revenue than itself.
Simply put, the acquisition quickly realigned AppLabs’s five-year-old position to the numero uno position in IT testing services. And put the almost-entirely offshored company—(it has more than 90 percent of its workforce in Hyderabad)—among the aces in testing services companies exactly overnight.

Announcing further expansion plans in India, Reddi spoke in lengths as to what India can do for global testing industry. And how he wants to position AppLabs as a leader in the space, even after five years, he is preparing himself to cash in on this rapidly growing business opportunity.

The outsourced testing services market is about $3 billion, one-third of which is outsourced to India. Independent testing firms in India (like AppLabs), garner close to $300 million—about10 percent share of the outsourced testing market. And AppLabs makes $75 million of this. Though Reddi is sure to hold major chuck of this market, what excites him is the 70 percent annual growth rate of the market itself. Almost all other independent testing firms in this country are fairly small. Reddi sees some consolidation within next three or four years in this fragmented market and predicts that there would be independent testing companies of $200 to $300 million revenues emerging from India.

Birth of an AppLaber
A doctorate from the Wharton School, University of Pennsylvania, Reddi had built two software product companies early in his career. So he went ahead and setup AppLabs, an IT services company in 2001. But soon he realized the need for a specialized testing service for other software product companies. As he spoke to several of the CTOs, it was no brainer that they were comfortable to outsource testing part of their work. Within the first three years, AppLabs found itself executing testing for several of the product companies in the U.S. “We started seeing ourselves as specialists in the testing business,” says Reddi. Today the company does testing for nearly 80 software product companies.
For the initial three or four years, AppLabs remained content with its humble position as a small testing company. The company was scaling up the ladder at a nominal pace. Since AppLabs operated in a fairly fragmented market, like every other independent testing company in the country, Reddi’s venture lay unaware of the potential hidden in the market.

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