The Bug Busters
When ObamaCare, US President Barack Obama’s pet scheme to make healthcare more accessible to citizens, got hit by the ‘heartbleed’ bug last year, seven million Americans had to re-register and the nation endured unnecessary costs. The website crash is a classic example of the need to get software tested independently.
Before rolling out IT projects, big companies traditionally seek an outsider’s view on the software to be used, as problems tend to crop up on use. Now, companies are crowd-sourcing testing engineers for the job, which costs them a third of what established services firms charge. This has spawned several independent startups which test software for clients.
Praveen Singh was one of the early birds who sensed this opportunity back in 2010 after analysing the business model of US-based testing startup uTest. uTest has since scaled up dramatically in five years. In 2014, it had more than one lakh independent registered testers on board and counted Microsoft and Google among its clients. In addition, it had raised $34 million from Goldman Sachs and was set to acquire other testing companies.
Singh wanted to replicate the uTest model in India — with the local software testing community serving a global clientele. “The plan was to make testing accessible since we have so many engineers here,” says Singh, who worked with Oracle and a couple of startups before turning entrepreneur in 2010. He started 99Tests with an investment of Rs 10 lakh from his father and Rs 5 lakh from a high net worth individual.
|Year Of Founding: 2010|
What It Does: Lets freelance testing engineeris detect and fix bugs in a client's software before its launch
USP: Cost-effective crowd-sourced option of testing software for clients
Funding: $100,000 in 2013
Competitors: uTest, LogiGear, QASource
Revenues: $500,000 (2013-14)
Number Of Employees: 10,000
Singh’s first client was a relative whose startup Practo — now Sequoia funded — was testing its appointment scheduling app for doctors. As soon as Singh put the app up on the website, 50 testing engineers, who had signed up for the assignment, detected problems with its coding.
Success with Practo led Singh to set up 99Tests as a full-time business. This meant that somebody had to aid him in the company’s day-to-day operations and bring in more clients.
Through a mutual friend Singh met Naveen Kumar, a former SAP employee and IIT-Powai graduate, who had run a startup that later closed down. The two clicked. “We knew that startups were about risk and the failure rate was high. It is something that we both accept,” says Singh, also the chief executive officer of 99Tests.
Together, they doubled the number of testers on the company’s rolls from a few hundred to more than 6,000 by the end of 2013. At present, it employs 10,000 software testing engineers who have detected 60,000 bugs.
“Business is based on performance,” says Singh. The more bugs an engineer finds, the better his pay. Usually, an engineer earns Rs 7,500 per week on a project that lasts five days; 99Tests charges an additional Rs 7,500 as expenses. Pricing also depends on the size of the project.
The software testing market is worth $65 billion globally, of which India accounts for only 10 per cent, says Nasscom. The local market has the potential to earn $20 billion in revenues by 2020, of which exports will make up 10 per cent.
Singh and Kumar were not drawing any salary until a chance phone call from the global chief information officer (CIO) of an insurance firm in 2013. Allianz Insurance had signed a $5 million contract for software with a big Indian IT services firm. An Internet search led to CIO Steve Coles finding 99Tests. He called up Singh and Kumar and asked them to pilot-test the new platform. In under a month, 99Tests detected several bugs in the platform. By contracting99Tests, Coles had managed to save 50-80 per cent of what he would have paid had he employed the services of a big firm. So impressed was he with 99Tests that he invested $100,000 in the fledgling company and asked Singh and his partner to scout for more business. “We were amazed by the speed,” says Coles. “99Tests was a standout in testing quality, coverage and capability of their cloud testing platform.” With the capital infusion from Allianz, its revenues soared to $500,000 in under 18 months. It is on course to increase revenues to $1 million by the end of 2015.
99Tests has created two revenue streams to potentially earn Rs 50 lakh every month. The first stream is for small businesses, which can self-serve their platforms on their respective websites by signing in and paying a fee of $995 per test cycle.
Under the enterprise revenue stream, a product manager, along with a set of independent testers, is assigned a project and works on non-disclosure pacts. “We need money to market the self-serving model,” says Singh. He adds that India has more than four lakh testing engineers, who can use 99Tests to earn additional income. Also, close to 10 lakh app developers in India can sign up and test their software.
“Engineering quality in a connected world is about automation test suites that can cover the entire gamut of features in each iteration,” says Stewart Noakes, founder of TechHub, a work centre for startups.
Keeping this in mind, the founders of 99Tests hope to compete with the world’s 15 largest testing firms and command a share of the $20 billion market by 2020.
(This story was published in BW | Businessworld Issue Dated 23-02-2015)