IS Integration acquired by AppLabs Technologies case study

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IS Integration Acquired by AppLabs Technologies to Create the Largest Global Provider of Testing Services

London, Philadelphia and Mumbai

September 20 2006

IS Integration, the leading UK based IT and business solutions testing consultancy, is today announcing its acquisition by AppLabs, the leading provider of testing services in the US for $37million, some of which is contingent on future profits. 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 USbased 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 companies’ client base includes: American Airlines, American Stock Exchange, Cisco, SAP, VISA, Royal Bank of Scotland, National Australia Bank and Littlewoods Shop Direct Group.

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.

About AppLabs Technologies

AppLabs Technologies is a global IT services company specializing in software testing and development, with an emphasis on quality assurance, performance, certification and hardware testing. Customers include American Airlines, InstallShield, HP, Novell and SAP. AppLabs is the first software testing company to get appraised at SEI CMMI Level 5, the highest quality standard attainable in software engineering. The company is headquartered in Philadelphia, Pennsylvania and maintains state-of-the-art testing centers in Lindon, Utah and Hyderabad, India. For more information, visit www.applabs.com.

IS Integration

Established in 1994, IS Integration was set up as one of the first specialist testing companies in the UK providing the service and the know how to conduct fail safe testing procedures in integration projects. The company’s focus has shifted in recent years, not to focus solely on IT but looking at testing from the broader business perspective. One of the core aims of IS Integration is to help organisations maximise the value from their IT systems. IS Integration advocates testing as a planning tool for an entire IT project, to use
throughout the entire project lifecycle. All IS Integration consultants adhere to the company’s PaSS ™ testing method, which provides techniques for undertaking formal testing at the design and specification stages. The company is HQ’d in Preston with centres in Reading and Edinburgh and employs over 300 people. Clients include: Barclays, Provident Financial, Royal Bank of Scotland, Experian and Littlewoods Shop Direct. For more information go to: www.isintegration.com.

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