IS Integration has announced its acquisition by AppLabs. Together, the merged businesses will create the largest global provider of testing consultancy, with a combined staff base of approximately 1,500 employees and a forecasted $75 million revenue and $8 million profit this fiscal year ending in March 2007.
This news follows the June, 2006 announcement that AppLabs has received $10 million in funding from Sequoia Capital India. The investment in AppLabs totals $17 million, one of the largest investments Sequoia has made in an Indian company.
Under the scope of the AppLabs-IS Integration agreement all offices will continue to operate as they are and all staff will remain employed in the UK based company . IS Integration will effectively form the European arm of AppLabs. The company will continue to operate as IS Integration for the next 6 months, thereafter it will operate under the name AppLabs.
The acquisition offers excellent synergies for customers and partners. AppLabs is a US-based company with wide-ranging operations, predominantly in product performance and security testing, in the United States and in India. IS Integration's credentials lie in the European enterprise testing space. The joining of the two operations will yield numerous benefits for the new AppLabs to include: increased market share; a global footprint; broader vertical market expertise; improved resources - in terms of both training and R&D - and additional relationships with partners and testing tool providers.
Additionally, following the transition AppLabs will boast an increased portfolio of services, encompassing: product testing, product development, offshore testing and banking, insurance and financial services; retail; utilities; public sector; technology and telecommunications sector expertise. This will provide significant opportunities for clients to take advantage of a broader and more diverse array of offerings on a global basis.
The merged entity will immediately employ approximately 1,500 people on three continents. Headquartered in Philadelphia, PA, USA, AppLabs employs 80 people in the US, over 1100 in Hyderabad, India and around 300 are based across client sites in the UK. AppLabs has announced its aim to employ an additional 600 professionals by the year end to give a total staff base of over 2,000. AppLabs is looking to grow its operations in its current countries of presence, but also to expand globally, to include a pan-European presence.
Sashi Reddi, Founder and CEO, AppLabs, commented on the acquisition: "We are delighted to make this significant announcement at a time when the testing market is showing unprecedented growth. The acquisition positions AppLabs well to continue to enjoy rapid growth in this market, whilst offering our clients a broader range of services on a global basis."
The acquisition results in the development of a strengthened management team. Sashi Reddi, CEO of AppLabs, will continue as CEO of the newly merged entity. Adam Ripley, co-Managing Director of IS Integration will take up the position of Senior VP of Marketing for AppLabs and Clive Grummett, co-Managing Director of IS Integration will take up the position as Senior VP of AppLabs for Europe . Gary Davies, currently Business Development Director at IS Integration, will assume responsibility for worldwide strategic alliances. The other IS Integration Board members will continue in their positions, managing the various regional divisions and reporting to Clive Grummett. The management team will immediately assume their new roles and effect the transition of the merger over the next 6 months.
Adam Ripley, co-Managing Director, IS Integration, stated: "The rationale behind IS Integration's Board decision was its commitment and desire to continue the strong growth and development of the business. The synergy of this acquisition affords IS Integration to increase its market share and portfolio, yet not lose its existing operations, infrastructure or culture."
Objective third party software testing is an emerging category of IT services that has already become a $13 billion market. Industry analysts such as Forrester and Gartner are forecasting its continued rise, stating that it can be difficult for internal testers who are part of development to objectively assess application quality.
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