Entry and sustainable growth strategies for firms offering independent software testing services

Abstract

Outsourcing has redefined the traditional 4Ps to Place, Price, Processes and People. Vendors should be in position to quantify the total aggregate costs of outsourcing to potential clients. This project attempts to analyze the factors which influence the outsourcing decisions to Independent Software Testing Vendors (ISTV). This has major implications on entry and sustainable growth strategies for early stage firms. We hypothesized that external market conditions, client characteristics and internal resource competencies of the ISTVs have an influence on the volume and type of activates to be outsourced in addition to influencing the engagement models. In addition we examined the factors such as cost, core competency, technology and bundling of services which influenced the vendor selection. Data was collected using open ended interviews with senior executives in the IT industry and online survey collected responses from a cross section of professionals in the IT industry. Literature survey from peer-reviewed journals, company websites, industry reports and white papers was used for secondary data. Analytical techniques were used to validate several of the hypotheses. The results have several managerial implications. Factors which influence the outsourcing decision are analyzed and indicate the firm level capabilities which contribute to higher revenue generating capability. Asset specialization and investment into engineering competency buildupare given a close look and are compared to the marketing and sales of these assets and competencies. A few growth strategies are examined and explained in the context of this study.