Business Case for

Outsourced
Product Testing
Somenath Nag

Abstract
Next generation software product companies face
multidimensional challenges in the marketplace. Due to
current economic conditions, ISVs are experiencing pressure
to control costs while retaining market leadership. Since
customer satisfaction is becoming the key to survive in this
market, increasing software quality has become critical with
the increased complexity and frequent releases of the
products. In this paradoxical situation, ISVs are faced with the
problem of achieving more with less.

This paper focuses on how ISVs can optimize their R&D

budget through a strategic initiative in the form of
outsourced product testing. Though outsourcing is a
common practice for many ISVs, in most cases, it is not
treated as a strategic initiative. Generally it is used as a cost
saving measures, and used as a tactical tool. Blue Star
Infotech is a leading provider of quality testing services to ISV,
and has been a strategic partner for their outsourced product
testing initiative. We have successfully demonstrated the ROI
of an Outsourced Product Testing initiative to many ISVs.

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Introduction
The recent sharp downturn in the economy is forcing independent software vendors to reconsider their approach
towards product engineering. In light of the new business realities, companies are forced to consider how they can
reduce their R&D budget, or get higher return on the same or incremental investments. However, it is becoming
increasingly important for ISVs to enhance customer loyalty and reduce support cost! ISVs are realizing that one
way to achieve this is by improving the quality of the product without increasing the cost of quality. Consequently,
ISVs are actively considering outsourcing non-core functions like testing to cut costs quickly, avoid new capital
investment, and improve product quality.

Why Outsource Product Testing

Testing is a vital phase in any product development initiative. Frequently changing requirements coupled with a
reduced product development life cycle has increased the pressure on testing teams to do more at less. They face
time crunch as well as resource crunch. A survey conducted by the National Institute of Standards and Technology
(NIST) has found that US companies spend as much as $60 billion on fixing software defects at the post-release
stage. This study also reveals that third party QA & Testing could have saved companies nearly $20 billion. The direct
cost of quality in terms of staff time by itself is a compelling reason for considering QA & Testing outsourcing model.
Though it is difficult to measure, the loss of revenue in terms of repeat business, due to unhappy customers, is also
significant. A well structured outsourcing model can help ISVs reduce cost (by using less expensive resources) and
increase the quality of the product, which ultimately results in satisfied customers. Migrating to an outsourced
product testing model, where the onus of product quality is shared with the participating testing company, will give
product companies a competitive advantage in the marketplace.

Current Situation
However, as per a Forrester report published in 2008, despite the enormous potential benefits of outsourcing, not
many organizations currently outsource their testing activities. According to a survey of IT leaders, only 16% of
organizations outsource software testing while 16% expect to outsource to a third party in the next 12 months.
Though another 29% were considering using a third party for this service, a substantial 39% were not in favour of
using this service. While this is one side of the story, the outsourced testing market is actually experiencing a rapid
growth, and according to the same Forrester report, outsourced testing services is growing at 50% annually or
higher.
There is a growing awareness that software product testing is a specialized skill, and cannot be accomplished
merely by any developer. But it is becoming increasingly difficult for CTOs to allocate enough funds to hire expert
resources, or train the existing resources to meet the demand. As a consequence, product quality is increasingly
being compromised.

Offshore outsourcing
Though ISVs are slowly getting convinced about the benefit of outsourcing their QA activities to offshore partners,
in most of the cases they merely treat this as a cost saving measure. Offshore outsourcing of product testing, if
treated strategically, can yield more than just cost benefit. However, treating offshoring as process of simply moving
existing software product testing to an offshore outsource partner may be counter-productive. Executives making
the decision to offshore testing must draw the strategic plan for outsourcing, define their goal, and last but not the
least, must understand the possible pitfalls of outsourcing. This will enable them gain maximum from their
outsourcing initiative.

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Challenges Faced in
Outsourced Product Testing
Activities
We all know that product development, being a more
intense & involved process, differs from application
development. Similar is the case of product testing.
Hence, outsourced product testing comes with its
own set of challenges. Some of the major challenges
faced in outsourced product testing are:
• Partner integration: Success of an outsourced
product testing initiative is based on the
integration of methodology, usage of proper tools
& technologies, and a right-sourcing approach. It
is easier said than done. And is normally is the
primary reason for failure of such initiatives.
• Proper communications management: Due to
language and cultural barriers, time-zone
difference, physical distance, and poor processes,
many times it becomes difficult to have an effective
communication process.
• Mismatched or miscommunication of
expectations: Absence of a well-defined goal and
an ineffective oversight process, along with poor
communication, can create difference in
expectations
• Lack of product engineering focus: Most of the
offshore vendors are application service providers.
Hence, they do not have the required expertise or
more importantly, the necessary product mindset
to test a product
• Management issues due to the lack of a workable
test management process and associated
methodology
• Vendor problems or vendor infrastructure
problems such as poor data bandwidth.
• IPR protection concerns
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Overcoming the Challenges
Many of the barriers associated with Outsourced
Product Testing activities, as mentioned above, can be
overcome by selecting an experienced and reliable
testing partner with requisite product engineering
expertise, quality orientation, structured processes,
proven credentials, and an impeccable record on
protecting its customer’s IP. This will ensure that
product engineering principles are in use and best
practices are consistently applied. Cost advantages are
achieved through various means such as –
optimization of the testing process, test automation,
leveraging low-cost test centres. When successfully
planned and executed, outsourced product testing
can reduce the overall product engineering cost by
40% or more, as well as shortening the time to market
and improve overall software quality. But to ensure
the best possible results from product testing
outsourcing initiative, you must:
• Hire specialist companies to conduct product
testing, These companies should have strong
background and proven track record in providing
Product Engineering Services
• Plan the process thoroughly. Invest time upfront in
benchmarking current performance thoroughly
and prepare detail business case to ensure that the
provider delivers a tangible return on investment
• Do not focus only on cost reduction. Take a
strategic view of the engagement and select a
partner rather than a vendor. This will ensure that
you gain other tangible and intangible benefits
• Give proper importance to outsourcing location.
Evaluate parameters such as past history,
availability of skilled manpower, language
capability, political stability, stable economy, etc.,
along with cost structures
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Outsourcing Benefit
Cost savings, though a major result, is not the only benefit of outsourced product testing. Benefits from an
outsourced product testing initiative become more significant when combined with a global delivery model and
right-sourcing model. In addition, companies that have already out sourced their product development process will
be benefited by using an independent third party for testing. Here the testing partner works as a certifying authority,
providing unbiased insights into improving product quality. Following are the benefits that come out as a result of a
successful outsourced product testing initiative.

Higher return on QA investment Flexible Scale

ROI of a product quality initiative includes the savings
occurred due to decreased rework, increased
customer satisfaction, lower support costs, and
decreased product maintenance cost. An outsourced
product testing program, if executed successfully
using an offshore/ dual-shore model, not only lowers
the cost of testing by reducing staff cost, but also
helps to increase product quality. A company can save
up to 40% in direct staff cost and another 10-20% in
associated costs through outsourcing model.
Shorter Revenue Realization Cycle
The testing lifecycle is characterized by staffing peaks
and troughs. Managing this variation of utilization
becomes a challenge for in-house testing
departments. This always results in either lower
utilization (higher cost) or non availability of skilled
resourced when required most. But in an outsourced
product testing scenario, managing the ebb and flow
of resources becomes the responsibility of the testing
partner. Hence, outsourced product testing provides a
much needed degree of flexibility to the client
Organisation, and allows them to focus on product
design and development activities.

Outsourced product testing can help reduce time to

market with the usage of additional skilled resources
and test automation. This helps the company to reach
market faster and protect/create competitive
advantage. Hence, outsourced product testing
initiative helps companies shorten their revenue
realization cycle, which means they can achieve more
with less capital or invest the free resources in growth
related initiatives.
Improved Efficiency
If properly planned, a well defined outsourced testing
engagement can bring improvements in quality and
delivery processes. Outsourcing engagements are
governed by defined Performance Metrics (PM) and
Service Level Agreements (SLA). Outsourced testing
service providers have formal and proven testing
methodologies rather than heuristic or experiential
techniques to identify, generate, and execute test
cases. These formal methodologies provide for
enhanced coverage and defect identification resulting
in an improvement in product quality. Clients can
benefit from working with outsourced testing
companies by sharing best practices and investing in
process improvement initiatives.
Independence and Insight
Good software development practice calls for
separating the development team from the testing
team. The primary purpose behind this separation is
to provide an unbiased view of the product quality. In
many cases, these checks and balances are
compromised due to constraints like product release
pressure, same team working for both development
and testing, absence of any proper certification
process, etc. Outsourced product testing brings a
certain degree of independence, leading to greater
visibility of product quality issues. This unbiased and
independent insight helps the product management
team to make more informed business decisions on
product release schedule and product quality.
In a distributed development scenario, when product
development is outsourced, an outsourced testing
team becomes even more valuable. The outsourced
test team serves as the certification authority,
providing for an unbiased third view, which is
independent from client’s Organization and the
outsourced development Organization. This
evaluation is more objective as it is delivered
independent of two reference points.

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Conclusion
Outsourced Product Testing is not a new idea — current economic situation has made it more appropriate and
attractive. Over a period of time, the process also has become mature and you have more offerings available from
service providers. The current economy, customer’s intolerance towards product quality issues, and new
competitions are leading more product companies to adopt the outsourced product testing initiative. Outsourced
testing service providers, who compete with one another and whose core business is to provide these services, have
also made an investment to go up the value chain by developing reusable IP in the form of automated testing
frameworks and employing the necessary skilled resources to serve customers and maintain their competitive edge.
These service providers have become more efficient over a period of time, and offer services faster, better and more
cost-effectively compared to an in-house function.

The current recessionary state is opening up a strategic option for leaders: free up scarce cash for deployment
elsewhere to focus on core capabilities. We see a greater flexibility in offerings from outsourced test service
providers, and an overall increased receptiveness to outsourcing in general by Organizations. Globalization (aka
flattening of the world) has also resulted in product companies seeking new ways of doing business, learning new
techniques, optimizing the software manufacturing process, and making funds available for global initiatives. This
makes the business case for outsourced product testing more appealing as it enables organizations to free up both
its cash and critical resources and have a partner care for its quality. Outsourced product testing offers a strategic
option to ISVs to be prepared to scale new heights when market conditions improve.

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Success Story – Managed Test Centre for an US ISV
The Client
The client is a well funded, privately held ISV providing
a series of innovative, internet-based, digital
workspace solution to the financial and
pharmaceutical industries. The client’s solution is now
an industry standard for the delivery of highly secured
documents and messaging solutions for almost all of
the leading financial institutions and pharmaceutical
companies in the USA.
The client helps companies communicate sensitive
business information across the Internet through their
digital workspaces. The service delivered by the client
is 24*7*365 and uses a highly secure 128-bit
encryption. With companies bracing up to Disaster
recovery and business continuity plans, electronic
document management systems have become
necessary. The client seeks to fill this space.
Business Need
The client had their own QA team. The increased
demand for their product resulted in a need for
delivering product enhancements cost-effectively.
Their product had to undergo a rigorous functional
and compliance testing to comply with rigorous
procedures defined by the 21 CFR Part 11 regulations
for pharmaceutical industries. In this context, they
sought the services of a vendor who could provide
independent testing services cost effectively and
without compromising on their product quality.
Solution Offered
Blue Star Infotech (BSI), an existing development
partner, was selected as a QA partner for this
engagement because of its product knowledge,
product engineering focus, and product testing
expertise.
BSI had an independent testing practice that was
well-equipped to meet the requirements. In order to
make this truly independent (of the offshore
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development team), BSI set-up a managed test centre
at a different development center, and also set up the
process model such that both teams would operate
under a hierarchy driven by the respective client
teams.
Client’s QA team and the BSI team work closely under
a common schedule, but had responsibility of testing
different modules independently. Both teams have
effectively used Test Director to streamline the entire
testing process. The test plan and scripts created by
both teams are loaded on to a Test Director repository
hosted at the client site and accessed from offshore
through a secured VPN. The test results are also
loaded on to this repository so as to provide an overall
view of the product quality.
Apart from providing functional testing services, BSI
team also took part in ‘21 CFR Part 11’ compliance
testing.
Benefits to Client
• The ‘Follow-the-sun’ approach adopted by the
Client & BSI resulted in shortening the test cycles by
75% and thereby reducing product release
timeframes
• BSI’s knowledge of core product and a strong
testing expertise ensured superior product quality.
• BSI’s offshore model resulted in 60% reduction in
cost of quality
• Reduced cost of compliance using BSI’s
compliance testing service
• The size of the team deployed for the client at the
offshore center was flexible based on the need. In
times of peak-load periods, additional testers were
deployed within a minimum timeframe by using a
quick-start induction manual specially developed
by BSI
• BSI also incorporated its best practices into the test
methodologies adopted that enabled realization
of higher product quality
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Blue Star Infotech’s ‘Testing as a Service’ Offering
‘Testing as a Service’ – a.k.a. TaaS can help you lower your cost of quality by testing the product faster and at a lower
cost. BSI can provide extensive QA leadership and experience to meet the testing challenges of even the most
complex and demanding requirements. These services are delivered through processes, frameworks and tools that
integrate smoothly with your development process and keep you constantly apprised of the inherent quality of the
solution being developed.

Blue Star Infotech’s test teams can either work in tandem with your QA team or completely take over the testing
activities including formulating an appropriate test strategy based on defined objectives, initial planning, tool
selection (if appropriate), creating sterile test environments, preparing test plans and test cases, establishing
traceability matrices, test data creation, and running the tests.

BSI’s TaaS services:

• Integration, system and UAT

• Software quality testing
• Test strategy • Regression testing
• Test process • Product testing
QA Functional
Consulting Testing

Test Non Functional

• Data migration verification Automation Testing • Load testing
• Regression and functional • Stress testing
• testing • Volume testing
• Package testing • Endurance testing
• Web service testing • Architecture benchmarking
• Automation architecture and frameworks • Performance monitoring

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About Blue Star Infotech
Blue Star Infotech is a reputed global provider of innovative, business-driven product testing services . As an
independent testing specialist, we have worked with many IVS, ranging from start-ups to Tier 1 ISVs, and helped
them deliver quality products to their customers. For the last 25 years, our clients have benefitted by using our cost-
effective testing solutions such as TaaS (Testing as a Service) and Managed Test Centers. With more than 1000 man
years of Product Testing experience and a global delivery model we are ready to serve you across the globe.
To know more about our independent services visit our website
http://www.bsil.com/independenttestingservices.html.
Blue Star Infotech has been ranked 12th amongst the top global R&D
Service providers by Zinnov Management Consulting Pvt. Ltd, in a first-of-
its-kind ranking of the Top Global R&D Service Providers across geographies
like India, China and Eastern Europe.

Blue Star Infotech is a global provider of Software Product Engineering services. Since inception in 1983, it has been
instrumental in enabling organizsations to increase quality of their products by leveraging its testing services. By
combining homegrown accelerators, collaborative methodologies, best-in-class talent, and delivery excellence,
Blue Star Infotech has enabled ISVs to gain a competitive edge

Contact Us

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