Outsourced Software Testing Market Analysis North America,Europe,APAC,South America,Middle East and Africa - US,China,Japan,Germany,UK - Size and Forecast 2024-2028

Outsourced Software Testing Market Forecast 2024-2028 

The outsourced software testing market size is estimated to grow by USD 30.46 billion at a CAGR of 14.41% between 2023 and 2028. The increased demand for mobile and web applications is driven by the growing use of smartphones and the internet, which has led to a greater need for mobile-friendly and online solutions. The increasing demand for cost-effective solutions is prompting businesses to seek out efficient and affordable software solutions, including mobile and web applications. The rise in adoption of digital transformation initiatives across various industries is driving the need for innovative and technology-driven solutions, further fueling the growth of the market for mobile and web applications.

The report provides market size, historical data spanning from 2018 to 2022, and future projections, all presented in terms of value in USD billion for each of the mentioned segments.

What will be the Size of the Outsourced Software Testing Market During the Forecast Period?

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Market Segmentation

The market is segmented by and Product (Outsourced embedded software testing and Outsourced standalone software testing ), End-user (BFSI, Telecom and media, Retail, and Others ), and Geography (North America, Europe, APAC, South America, and Middle East and Africa) .

By Product Segment

The market share growth by the outsourced embedded software testing segment will be significant during the forecast period. Embedded software is integral to a broad range of devices and systems, serving critical functions in industries such as automotive, healthcare, consumer electronics, aerospace, and industrial automation. As the complexity and connectivity of embedded systems continue to grow, the need to ensure reliability, safety, and performance becomes increasingly vital. 

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The outsourced embedded software segment was the largest and was valued at USD 15.12 billion in 2018. The segment encompasses the verification and validation of firmware, device drivers, communication protocols, and system integration aspects. The active involvement of these specialists enables organizations to identify and rectify potential issues early in the development lifecycle, leading to improved product quality and accelerated time-to-market for embedded systems. In addition, the segment often extends to areas such as Internet of Things (IoT) device firmware, medical device software, industrial control systems, and consumer electronics. Thus, the above-mentioned factors are expected to drive the segment in the global market during the forecast period.

By End-user Segment  

The BFSI holds a significant position in the global market, reflecting the critical need for comprehensive services within this industry. As financial institutions and insurance companies continually modernize their technology infrastructure and introduce new digital offerings, the demand for efficient and high-quality solutions has surged within the BFSI sector. Moreover, the BFSI sector demands a rigorous approach to security, encompassing vulnerability assessments, compliance audits, and data protection evaluations. The companies with expertise in BFSI-specific security standards and best practices offer valuable support in identifying and addressing potential cybersecurity threats within financial software applications and digital channels. Thus, the above-mentioned factors are expected to drive the BFSI segment in the market during the forecast period.

By Region

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North America is estimated to contribute 40% to the growth of the global market during the forecast period. Technavio’s analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period. North America holds a significant position in the global market due to the large pool of skilled IT professionals, technological innovation, and a robust regulatory environment. North American companies have been at the forefront to increase operational efficiency, reduce costs, and access specialized expertise. With a focus on quality, security, and compliance, North American firms have demonstrated a strong preference for these to meet their business objectives. One of the primary reasons for North America's prominence in the global market is the presence of a vast talent pool of software professionals. 

Furthermore, companies in North America continuously invest in cutting-edge tools, methodologies, and best practices allowing them to deliver superior services to their clients. This emphasis on innovation has led to the development of advanced solutions for emerging technologies such as AI, IoT, blockchain, and cloud computing. Thus, such factors are expected to increase the demand which will propel the growth of the regional market during the forecast period.

Market Dynamics and Customer Landscape

The market is driven by the need for organisations to ensure the quality of their software applications. Outsourcing testing tasks to specialised third-party service providers offers several advantages over relying solely on an internal development team. These providers offer a tactical strategy for testing throughout the software development life cycle, leveraging their worldwide talent pool of testing specialists with the necessary skill sets and core capabilities. They employ inventive techniques and AI and automation tools to ensure thorough and exacting testing procedures. Cloud-based testing solutions further enhance scalability, flexibility, and affordability, particularly beneficial for geographically separated teams. Specialised testing services include functional, usability, performance, and security, ensuring error-free software and comprehensive test case coverage.

Key Market Driver

Increased demand for mobile and web applications is notably driving the market. The global market is witnessing a substantial increase in demand for mobile and web applications, driven by several factors. These include the widespread adoption of smartphones, a growing reliance on digital platforms for various activities, and the increasing complexity of software architectures. To ensure the seamless functioning, security, and quality of their applications, companies are increasingly turning to outsourced providers offering cloud-based testing solutions and services. This approach provides scalability, flexibility, and affordability, allowing companies to meet their testing needs efficiently.

One of the main drivers behind this demand is the necessity for comprehensive testing of mobile applications across diverse devices, operating systems, and network conditions. Companies leveraging these services benefit from an agile and scalable testing approach, along with access to specialized talent and advanced infrastructure. This includes usability testing, performance testing, and security testing, ensuring that their applications meet high standards for functionality and reliability. This allows them to expedite their time-to-market, reduce testing expenses, and maintain a competitive edge in the rapidly evolving mobile and web application development landscape. These factors are anticipated to drive market growth in the foreseeable future.

Signifcant Market Trends

Technological advancements are an emerging trend shaping the market. Technological advancements in the global market have revolutionized the landscape of software quality assurance, enabling these providers to deliver more efficient, comprehensive, and precise solutions. These innovations have significantly enhanced the capabilities, empowering organizations to achieve superior quality and reliability in their software products. The evolution of cloud-based testing platforms has ushered in a new era of scalability and flexibility. A multinational software development company engaged an outsourced testing provider to ensure the flawless performance of its cloud-based enterprise application. 

Additionally, the integration of advanced analytics and big data technologies has empowered outsourced testing providers to extract actionable insights from vast volumes of testing data. A healthcare technology firm entrusted the testing of its patient management software to a specialized testing vendor. By employing big data analytics, the outsourced provider analyzed intricate patterns in the results, enabling the identification of potential usage trends, performance anomalies, and areas for optimization within the software. Thus, such factors are expected to fuel the market during the forecast period.

Major Market Restrain

Data security and privacy concerns a significant challenge hindering the market. Data security and privacy concerns have had a detrimental impact on the global market. The rising awareness and emphasis on protecting sensitive data have led to increasingly stringent requirements, especially for companies that outsource these services. In addition, high-profile data breaches and privacy scandals have further amplified these concerns. For instance, the widely publicized incidents involving large corporations have heightened the fear of potential data breaches through third-party companies, causing companies to reconsider their outsourcing strategies. As a result of these factors, the market has experienced a decrease in demand, impacting the revenue and growth prospects of service providers in this industry.

However, to counter these challenges, companies in the this space are now compelled to invest heavily in robust data security measures, obtain relevant certifications, and demonstrate a comprehensive understanding of data privacy regulations to regain the trust of potential clients. Thus, such factors are expected to hinder the market during the forecast period.

Market Customer Landscape

The Market report includes the adoption lifecycle of the market, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their growth strategies.

Global Market Customer Landscape

Who are the Major Outsourced Software Testing Market Companies?

Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.

Accenture Plc - The company offers Accenture myWizard used for automated and touchless engineering testing.

Atos SE - The company offers the Atos digital assurance platform used for natural language processing and machine learning testing.

Capgemini Service SAS - The company offers Sogeti TMap, TMap NEXT, TPI and TPI used for quality assurance QA testing services.

The market research report also includes detailed analyses of the competitive landscape of the market and information about 20 market companies, including:

• Amdocs Ltd.
• Assystem S.A.
• CGI Inc.
• Cigniti Technologies Ltd.
• Cognizant Technology Solutions Corp.
• HCL Technologies Ltd.
• Hewlett Packard Enterprise Co.
• Hexaware Technologies Ltd.
• Infosys Ltd.
• International Business Machines Corp.
• Larsen and Toubro Ltd.
• QASource
• Sutherland Global Services Inc.
• Tata Consultancy Services Ltd.
• Tech Mahindra Ltd.
• Thinksoft Global Services Inc.
• Wipro Ltd.

Qualitative and quantitative analysis of companies has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.

Segment Overview

The market report forecasts market growth by revenue at global, regional & country levels and provides an analysis of the latest trends and growth opportunities from 2018 to 2028

• Product Outlook
  • Outsourced embedded software testing
  • Outsourced standalone software testing

• End-user Outlook
  • BFSI
  • Telecom and media
  • Retail
  • Others

• Region Outlook
  • North America
    • The U.S.
    • Canada
  • South America
    • Chile
    • Brazil
    • Argentina 
  • Europe
    • The U.K.
    • Germany
    • France
    • Rest of Europe
  • APAC
    • China
    • India
  • Middle East & Africa
    • Saudi Arabia
    • South Africa
    • Rest of the Middle East & Africa

Market Analyst Overview

The market is witnessing rapid growth fueled by the adoption of agile and DevOps practices, particularly in industries like healthcare, banking, finance, and retail. Cloud-based testing services offer cost-effective solutions, with automation and AI-driven approaches ensuring high-quality results and compliance with stringent regulatory standards. Despite challenges such as economic slowdowns and supply chain disruptions, collaborations and strategic acquisitions drive market expansion. Key players in this competitive landscape emphasize specialized teams, efficient procedures, and customer satisfaction to meet the evolving demands of software development. With the continuous development of new applications and increasing customer requirements, the market is poised for sustained growth, propelled by advancements in digital technologies and well-established outsourcing companies.

The market is experiencing significant growth, driven by the demand for cost-effective and efficient solutions in industries like healthcare, banking, finance, and retail. Cloud-based services, automation, and AI-driven are key trends, ensuring quality while meeting stringent regulatory standards. Strategic collaborations and acquisitions drive market expansion, facilitating access to specialized teams and skilled professionals. Despite challenges like supply chain disruptions, the market benefits from advancements in technology and increasing urbanization. Mobile app, performance, and security testing are critical areas of focus, catering to the evolving needs of businesses worldwide. As the demand for these services continues to rise, driven by the continuous development of new applications, the market presents lucrative opportunities for software testing outsourcing service providers and stakeholders.

The market plays a crucial role in the development of various software applications, particularly in emerging countries where skilled software professionals may be in short supply. Independent teams specializing in the efficiency of testing ensure that core development activities are complemented by thorough quality assurance processes. Agencies offering these services cater to the necessities of clients by deploying highly skilled persons adept at handling complex understanding of diverse software requirements. Despite the risk of information leaks, the demand for these services remains high due to the continuous development of new applications and the high adoption of these services.

Region analysis reveals that countries with the highest revenue share often boast a huge IT and telecommunication industry, fostering an environment conducive to software industry applications. C-level executives recognize the importance of quality software and seek efficient deployment. In the computer industry, where requirements of customers evolve rapidly, it plays a critical role in ensuring customer satisfaction. Pricing analysis and market evolution studies help companies adapt to the competitive rivalry inherent in the market. Assessing the threat of new entry and substitution, along with supplier and buyer bargaining power, provides insights into value chain dynamics and the country GDP influence on revenue share. As the market continues to grow, companies must stay attuned to market trends and technological advancements to maintain a competitive edge.

Outsourced Software Testing Market Scope
Report Coverage	Details
Page number	168
Base year	2023
Historic period	2018-2022
Forecast period	2024-2028
Growth momentum & CAGR	Accelerate at a CAGR of 14.41%
Market Growth 2024-2028	USD 30.46 billion
Market structure	Fragmented
YoY growth 2023-2024(%)	13.44
Regional analysis	North America, Europe, APAC, South America, and Middle East and Africa
Performing market contribution	North America at 40%
Key countries	US, China, Japan, Germany, and UK
Competitive landscape	Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks
Key companies profiled	Accenture Plc, Amdocs Ltd., Assystem S.A., Atos SE, Capgemini Service SAS, CGI Inc., Cigniti Technologies Ltd., Cognizant Technology Solutions Corp., HCL Technologies Ltd., Hewlett Packard Enterprise Co., Hexaware Technologies Ltd., Infosys Ltd., International Business Machines Corp., Larsen and Toubro Ltd., QASource, Sutherland Global Services Inc., Tata Consultancy Services Ltd., Tech Mahindra Ltd., Thinksoft Global Services Inc., and Wipro Ltd.
Market dynamics	Parent market analysis, Market Forecasting, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, and Market condition analysis for the forecast period.
Customization purview	If our report has not included the data that you are looking for, you can reach out to our analysts and get segments customized.

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What are the Key Data Covered in this Market Research Report?

• CAGR of the market during the forecast period
• Detailed information on factors that will drive the market growth and forecasting of the market between 2023 and 2027
• Precise estimation of the size of the market size and its contribution to the parent market
• Accurate predictions about upcoming market trends and analysis and changes in consumer behavior
• Growth of the market industry across Europe, North America, APAC, South America, and Middle East and Africa
• Thorough market growth analysis of the market’s competitive landscape and detailed information about companies
• Comprehensive market analysis and report on the factors that will challenge the market research and growth of market companies

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