It is really hard to associate the diminutive, bespectacled, soft-spoken, gentleman who sat before me in perfectly colour coordinated clothes, with being a successful, first generation entrepreneur at the helm of a £22 million company. Fifty four year old Dr Prakash Mutalik, who looks more like a professor and has wide ranging interests from Indian classical music to nature photography, is the co-founder and Group President of Bangalore-based, RelQ Software Private Limited.
Set up in 1998, with operations spanning the US, Europe and the Asia-Pacific, this 600 employee strong, independent software validation and verification services company has been registering a year-on-year growth of 35 per cent consistently, since inception, with 70 per cent of its revenues coming from Fortune 100 companies.
Off the beaten track
At a time when programmers would rather die than take up software testing as their chosen career path, what made Dr Mutalik take the plunge and set up an independent software testing company? Not much has really changed from then to now.
Even today, test engineers are looked down upon and it is common knowledge that most developers would rather be involved in activities such as design and development, in a project, and then promptly move on to their next project says Dr Mutalik, wryly.
Identifying the untapped potential in the software testing arena, which in spite of being a key activity was neglected by most IT companies, Dr Mutalik went about studying the pros and cons of offering software testing services.
Studies have shown that lack of proper testing has cost the software industry billions of dollars. While companies ought to have spent close to 25-30 per cent of their total software project cost on testing, on an average, only one per cent was spent, pointed out Dr Mutalik.
Today, testing spend has gone up to between five and six per cent of the total project costs, but even that is totally inadequate and very few in the industry realised that there existed a potential gap that required an independent verification and validation service provider, he added.
Dr Mutalik (ex HP, Wipro), alongwith Srikanth Srinivasiah (ex SE Tech, Nelco), Prabhakar (ex Wipro, TVS), Dr V A Sastry (ex Infosys, Macmet) and Mike Shah (ex Digital) put together Rs one crore of their savings to set up RelQ, which stands for Reliability and Quality. There was no looking back after that.
Man & his mission
The stylish, chocolate brown, corduroy jacket, with the misty pink shirt and dark brown trousers which Dr Mutalik wore, bears absolutely no trace of his early days spent in the interiors of Belgaum district.
Son of a school teacher, Mutaliks early schooling was at Hukkeri village in Belgaum district and he passed out of the Karnatak College in Dharwad district. At a time when very little was known about computers, the adventurous spirit in Dr Mutalik prompted him to veer off the beaten track and take up a Phd in computer science at the IISc in Bangalore.
The next thing was to land the quintessential, dream job in research, with AT&T; Bell Labs in the US, where he worked for five years only to return to India in 1980 to head Wipros R&D; as Manager in charge of all engineering, quality and technical operations. The only reason I came back to India then, was because I was to get married and my wife didnt want to settle down in the US, chuckles Dr Mutalik.
He was Wipros 11th employee and left after eight years to join HPs India Software Operations as General Manager. With his job deteriorating to that of a glorified administrator, with a mandatory trip to the US every month, Dr Mutalik out of sheer boredom quit and became an independent consultant.
Bitten by the bug
Dr Mutalik has been a quality consultant since 1992 to several reputed software companies such as Verifone, Honeywell and Cadence, helping them build Quality Management Systems which were essential to meet ISO 9000 standards.
He helped 43 companies become ISO certified, some of which are Infosys, PSI, Tata IBM, Verifone, Honeywell Software and Cadence. As a consultant, he conducted several corporate and public workshops in software engineering topics such as Project Management, Software Estimation, Software Testing, Reviews and Configuration Management.
After six years of consulting, the entrepreneur in me was rearing to go. My time spent in consulting, provided me tremendous insight into what the IT industry lacked the most and I zeroed in on software testing as the right field to be in remembers Dr Mutalik.
Market potential
Testing is one of the hottest growing areas of IT today. Technology analyst firm Gartners analysis of the testing market reveals its huge potential. The estimated market for software testing is $13 billion, which is 39 per cent of the global outsourcing business. And the potential for outsourcing software testing to India is estimated to reach $2 billion in 2006-07.
Year-on-year growth for software testing is estimated at about 60 per cent. Large players in software services like Infosys and Wipro are increasing their investment on software testing services. MNCs like Sopra, a one billion Euro company, is also making inroads into the Indian market, with plans to hire a large number of software testing professionals from Bangalore in the coming months.
Herculean task
It was really tough going for us initially to acquire customers. The first step was to educate clients on the need to allocate a budget and spend on testing in order to be successful. The second step was to tell them that a start up company like RelQ could do a better job of testing than themselves.
Our first breakthrough, seed project came from Singapore Software Development in April 1998, which was operating out of ITPL in Whitefield. Fourteen of us worked for a total of seven months to complete the project for which we got paid Rs 20 lakh. The second project came from HP and I am happy to say that RelQ continues to work with HP till today.
In its first year of operations the company was totally India focussed, and RelQ had by then grown into a 100 strong company.
Footprint in US & UK
Not content with an India focussed approach, Dr Mutalik started looking at the US market in 1999 and clinched a project with Motorola and subsequently with General Motors (GM). With that came the need to have a formal presence in the US and UK with offices and a sales force.
In early 2000, the company raised $2 million from Citicorp, with the primary intention of setting up offices in the US and UK. Then, Deloitte Consulting and Citibank were added onto RelQs client portfolio. At that point in time, although we had more US based clients to start with, beginning 2000 our UK business had started growing. We started working with Vodafone who is our largest client to date, contributing almost 45 per cent of our total business.
Game testing
The company reached a turning point post 9/11, which saw people taking to gaming on a large scale. Those days when people preferred to stay indoors after the gruesome attack on the twin towers of the World Trade Centre, gaming gained popularity by the day.
RelQ decided to get into the game testing segment which had a huge growth potential. RelQ acquired a French Company called IT Testing which was doing work for Infogramme (now called Atari) for half a million dollars and started a dedicated game testing lab with a 100 strong team, here in Bangalore.
RelQ now has diversified its service portfolio into multiple verticals, which comprised of testing services in banking/finance/insurance, enterprise, telecom, gaming, avionics and consumer electronics.
The company has worked with HP in the enterprise vertical; NAL, Ministry of Defence in the avionics vertical; Vodafone and O2 in the telecom vertical; Sumitomo Bank, Citibank, Franklin Templeton and Barclays Bank in the BFSI vertical; Atari, Sega and Sony Connect in the gaming vertical and with Philips and Sandisk in the consumer electronics space.
High-end consulting
In order to round off its service offerings RelQ was ready to enter the high-end testing consulting space and went in for its second round of fund raising from ICICI Ventures and Acer of Taiwan. With which it acquired its second company for $3million.
With the UK based company called SQM (Software Quality Management) and its 35 consultants now on board, RelQs UK business started growing and flourishing so much that today 65 per cent of the companys business is from UK clients (Vodafone, O2, Aveva, Gedas among other) and 35 per cent is from US clients.
Aiming high
RelQ is now looking at exponential growth next fiscal with an income target of Rs 150 crore and a 20 per cent profit margin. RelQ will close this fiscal year with Rs 100 crore in revenue and Rs 17 crore profits.
It has three offices in Bangalore with another 40,000 sqft facility in the pipeline, two offices in the US, one office each in France and Singapore. The staff strength is expected to go up to 1,000 in six months. Hiring for the new office in Bangalore which will accommodate 400 employees is already underway. The company is investing Rs 10 crore towards new offices and hires this fiscal. We are running a RelQ Academy which pays (Rs 3,000-Rs 5,000) and trains 25 fresh engineers every month.
The advantage here, is that we absorb the best engineers into our own company, said Dr Mutalik.RelQ which has several firsts to its credit the first independent test company, first to venture into Avionics testing and Game testing, dreams of becoming the world number one in independent software testing.
It is announcing two new innovative test services like WebQ and ManagedQ this week, verticals and customers.
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RelQ Europe Limited +44 (7887) 538 496 sunil.prabhu@relq-europe.com
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