Fear, Uncertainty and Doubt Overcoming these in choosing an offshore QA & Testing provider April 23, 2008 Raja Neravati

Agenda Introduction Why Outsource Testing? Approach towards Outsourcing QA Outsourcing – What to Look For? Outsourcing – Check and Alignment Strengths & weakness of Testing Providers Evolving Country Decisions - Economics Outsourcing QA - ROI Trends Business Case QA Shift in the Paradigm Summary

Introduction

Why Outsource Testing?

Approach towards Outsourcing QA

Outsourcing – What to Look For?

Outsourcing – Check and Alignment

Strengths & weakness of Testing Providers

Evolving Country Decisions - Economics

Outsourcing QA - ROI Trends

Business Case

QA Shift in the Paradigm

Summary

Introduction We have not been successful in Outsourcing. We feel it is better to do in-house for better control & visibility. We have Global Roll-Outs which need significant co-ordination across various time zones. Outsourcing might not help in our scenario. There is lot of domain & business knowledge embedded into our systems. Outsourcing poses challenges; especially for QA. Outsourcing is more like a Risk-Reward Program. The higher risks, better are the returns. Outsourcing is a common practice and no brainier. What has changed of late? Bottom Line – Outsourcing is a must. How to Outsource & Succeed?

We have not been successful in Outsourcing. We feel it is better to do in-house for better control & visibility.

We have Global Roll-Outs which need significant co-ordination across various time zones. Outsourcing might not help in our scenario.

There is lot of domain & business knowledge embedded into our systems. Outsourcing poses challenges; especially for QA.

Outsourcing is more like a Risk-Reward Program. The higher risks, better are the returns.

Outsourcing is a common practice and no brainier. What has changed of late?

Reasons for Outsourcing Testing: Positively influence the bottom line Optimize & Gain Efficiencies Reduce Time-to-Market & Ability to Scale Lack of Professional Testing Expertise Improve Quality of Product Improve Customer Satisfaction Independent & Well-Defined Activity Improve the Behavioral Aspects of Development Why Outsource Testing?

Reasons for Outsourcing Testing:

Positively influence the bottom line

Optimize & Gain Efficiencies

Reduce Time-to-Market & Ability to Scale

Lack of Professional Testing Expertise

Improve Quality of Product

Improve Customer Satisfaction

Independent & Well-Defined Activity

Improve the Behavioral Aspects of Development

Approach towards Outsourcing QA Four Stages of Outsourcing Beginner Staff Augmentation Establish basic principles of QA Test the Results Intermediate Outsource with onsite / offshore model Improve QA Practices Develop basic governance models Gain Maturity in Outsourcing C Client Vendor V Beginner C V V C C C C C C C V V V V V Intermediate Onsite Offshore

Four Stages of Outsourcing

Beginner

Staff Augmentation

Establish basic principles of QA

Test the Results

Intermediate

Outsource with onsite / offshore model

Improve QA Practices

Develop basic governance models

Gain Maturity in Outsourcing

Approach towards Outsourcing QA Four Stages of Outsourcing Advanced Outsource projects – Low to High Risk Establishment of QMS Measurement & Metrics established Sophisticated Outsource all QA with Management oversight Explore Models like BOT, Global Program Rollout, Multi-Sourced as applicable. Partnership Strategy – Win - Win Situation C Client Vendor V Offshore Onsite V V V V V V V V Onsite Onsite C C V V V V Advanced V V V V V V V V V V V V C C An example of Sophisticated Outsourcing with Management Oversight

Four Stages of Outsourcing

Advanced

Outsource projects – Low to High Risk

Establishment of QMS

Measurement & Metrics established

Sophisticated

Outsource all QA with Management oversight

Explore Models like BOT, Global Program Rollout, Multi-Sourced as applicable.

Partnership Strategy – Win - Win Situation

People Cultural Challenges Global Integration Communication – Key Differentiator Project Management Skills – Vast Differentiator Process Governance & Engagement Models Capability & Maturity Metrics & Benchmarking Flexibility Test Data Protection & Privacy – Very Important Tools Expertise & Exposure Partnership Alliances COE & Frameworks Open Source Adoption – Key ROI Factor Other Immigration, Tax, Labor Laws Outsourcing – What to look for?

People

Cultural Challenges

Global Integration

Communication – Key Differentiator

Project Management Skills – Vast Differentiator

Process

Governance & Engagement Models

Capability & Maturity

Metrics & Benchmarking

Flexibility

Test Data Protection & Privacy – Very Important

Tools

Expertise & Exposure

Partnership Alliances

COE & Frameworks

Open Source Adoption – Key ROI Factor

Other

Immigration, Tax, Labor Laws

Does your provider have a Track Record with your type of testing ? Approach on Manual vs. Automation Testing Ability to provide a complete Quality Testing Framework (end-to-end) For example – Functional, Automation, Security, Performance, Consulting Expertise on the Tools you use Experience with companies like you Based on the nature of your company (Product, Enterprise, ISV), check for similar experience from Vendor Domain Expertise matters: Knowledge of your industry, similar kind of applications, business processes Flexibility in Adapting to your Processes Check how flexible the vendor is to integrate with your development or release models Ability to influence the best practices without significant impact to your business – Similar case studies Outsourcing – Check & Alignment

Does your provider have a Track Record with your type of testing ?

Approach on Manual vs. Automation Testing

Ability to provide a complete Quality Testing Framework (end-to-end)

For example – Functional, Automation, Security, Performance, Consulting

Expertise on the Tools you use

Experience with companies like you

Based on the nature of your company (Product, Enterprise, ISV), check for similar experience from Vendor

Domain Expertise matters: Knowledge of your industry, similar kind of applications, business processes

Flexibility in Adapting to your Processes

Check how flexible the vendor is to integrate with your development or release models

Ability to influence the best practices without significant impact to your business – Similar case studies

Strengths and Weaknesses of Full-Service Providers Full-service providers bring a vast array of resources to bear Most experience in testing, though not in standalone testing Largest testing practices More likely to have extensive domain knowledge But they simply aren’t as dedicated to testing View testing as a market opportunity, not a core focus Attract recruits who want to transition to other roles Rotate staff in and out of their testing from other businesses

Full-service providers bring a vast array of resources to bear

Most experience in testing, though not in standalone testing

Largest testing practices

More likely to have extensive domain knowledge

But they simply aren’t as dedicated to testing

View testing as a market opportunity, not a core focus

Attract recruits who want to transition to other roles

Rotate staff in and out of their testing from other businesses

Strengths and Weaknesses of Test-only providers Niche providers attract people who really care about testing Deep testing expertise and commitment to the space Many have rolled their own testing tools and have built out sophisticated testing facilities Little to no danger of non-testers being assigned to your project More experience with software and hardware product companies But niche providers bring fewer resources to the table Unable to rotate resources from other parts of their business to meet growing demand Less global footprint in terms of resources – i.e. likely to have 2-3 locations rather than upwards of 6 resource centres worldwide

Niche providers attract people who really care about testing

Deep testing expertise and commitment to the space

Many have rolled their own testing tools and have built out sophisticated testing facilities

Little to no danger of non-testers being assigned to your project

More experience with software and hardware product companies

But niche providers bring fewer resources to the table

Unable to rotate resources from other parts of their business to meet growing demand

Less global footprint in terms of resources – i.e. likely to have 2-3 locations rather than upwards of 6 resource centres worldwide

High Low Capabilities of Workforce Wages Education Qualifications/Capabilities Quality of work/Work ethic Attrition Rates Middle Management Talent Location Attractiveness Cultural Compatibility Infrastructure – Communication – Basic infrastructure Country risks Time zone attractiveness Tax Incentives Source: McKinsey, E-Business Strategies Evolving Country Decision – Economics Low High Singapore Hong Kong Czech Canada Australia China Philippines Mexico Ireland India Brazil Russia South Africa Hungary Costa Rica

Capabilities of Workforce

Wages

Education Qualifications/Capabilities

Quality of work/Work ethic

Attrition Rates

Middle Management Talent

Location Attractiveness

Cultural Compatibility

Infrastructure

– Communication

– Basic infrastructure

Country risks

Time zone attractiveness

Tax Incentives

Outsourcing QA - ROI Trends In-house 2000 Era - Savings up to 60%. 20% Allocated for Contingency & Risk Mitigation Savings & Contingency is almost equal. Major causes are due to increase in costs Savings are possible only when you choose the right Outsourcing Provider. “Zero realization of Contingency is Key to Success” Do it Right – The First Time !!! Time 2000 - 08 # No. of Clients Offshore Adoption ROI – Monetary Business Model – Focus on Labor Arbitrage Business Process – Focus on Integration & Alignment Net Savings Risk Contingency Project Costs Project Costs Risk Contingency Net Savings Project Costs Risk Contingency Savings

Business Case : An example

QA – Shift in the Paradigm It is recognised that Testing, if done right, does have a positive business impact Testing has evolved & matured to influence SDLC as opposed to just be the tail end of SDLC. Technology Innovation, Tools & Processes has made Testing to be considered as a “ The only Key to Success ” Testing Industry is focused now towards Prevention vs. Detection Test Driven Development. Why write Tests First? Lean Principle – “ Avoid Waste” What has changed in QA over the past few years

It is recognised that Testing, if done right, does have a positive business impact

Testing has evolved & matured to influence SDLC as opposed to just be the tail end of SDLC.

Technology Innovation, Tools & Processes has made Testing to be considered as a “ The only Key to Success ”

Testing Industry is focused now towards Prevention vs. Detection

Test Driven Development. Why write Tests First? Lean Principle – “ Avoid Waste”

Summary Move testing offshore incrementally - to suit the maturity of your organization Consider retaining some testers to work alongside developers Be careful in your selection of an offshore testing service provider Be careful while drafting your contract terms Look for Risk Reward Programs Incentive based pricing Multi-Sourcing and sourcing niche providers are the better models to succeed compared to outsourcing with a single “all services” vendor. Questions? Write to [email_address]

Move testing offshore incrementally - to suit the maturity of your organization

Consider retaining some testers to work alongside developers

Be careful in your selection of an offshore testing service provider

Be careful while drafting your contract terms

Look for Risk Reward Programs

Incentive based pricing

Multi-Sourcing and sourcing niche providers are the better models to succeed compared to outsourcing with a single “all services” vendor.

Questions?

Write to [email_address]