We recently talked to passbrains, the crowdtesting pure-play with dual headquarters in Hamburg and Zurich that has just been acquired by German IT service and VAR vendor, msg. The acquisition is timely for passbrains. Its founder died in the summer of 2020 at a critical time, as the firm was developing the 2.0 release of its crowdtesting platform and diversifying its client base.

msg will help passbrains accelerate the development of its 2.0 platform

The name of msg may not be familiar outside Germany, although the company is sizeable: it generated revenues of €1.03bn in 2019 and has around 8,500 employees. msg is headquartered in Munich and has a dual activity as VAR and IT service vendor.

Its profile is unusual in that it operates as a federation of IT companies in 28 countries, providing its members with operational flexibility while providing them with shared services. For instance, msg’s internal development teams based in Germany will take over passbrains’ platform 2.0 development activities.

The ongoing development of platforms is critical for the success of crowdtesting vendors: the crowdtesting industry heavily relies on its proprietary platforms for managing projects, selecting and inviting crowdtesters, and identifying log and QC-ing defects, especially for their agile testing needs. Crowdtesting platforms have become a significant barrier to entry; we think this partly explains why more IT service vendors have not entered crowdtesting and crowdsourcing, except through acquisitions.

psassbrains will also benefit from msg’s ideation software product, which it will incorporate in its crowdtesting platform. This is an important module that msg uses to generate and rate ideas, given passbrains’ positioning on UX testing.

msg brings test automation expertise

The msg acquisition also solves one strategic challenge for passbrains: many competitors have aligned their crowdtesting capabilities around agile projects, putting less emphasis on exploratory testing and UX testing. They intend to transition clients from manual activities to test automation. This makes sense in the context of agile projects to bring functional automation. However, the challenge for crowdtesting pure-plays is to invest in test automation and compete with IT service vendors that have developed very significant test automation capabilities, IP, and accelerators.

Currently, passbrains has maintained a balanced portfolio, unlike competitors, with UX testing still representing ~60% of its revenues. msg’s expertise will help passbrains accelerate in agile testing. msg has a testing unit with ~300 FTEs located in Germany. It brings some test automation scale across functional (with a specialization around Tricentis’ Tosca) and non-functional.

msg brings cross-selling opportunities to passbrains

In the short-term, a priority for passbrains is joint GTM with msg, addressing testing opportunities with a full range of testing services. msg brings in a client base in SAP in the insurance, public sector, automotive, and healthcare sectors in the German market and will help passbrains expand from its telecom client base. passbrains will spend the next six months educating msg’s sales force about its crowdtesting capabilities.

passbrains’ mid-term priority is to deploy further AI use cases. The company is implementing msg.ProfileMap to match projects and skills requirements and identify the right crowdtesters.

In the longer-term, we think msg and passbrains can further expand into AI-powered testing. AI is dramatically transforming how functional automation operates and is a real paradigm shift. We believe there is a window of opportunity for passbrains/msg there.