Contract wins for Managed Services Division

8 December 2010

SQS Software Quality Systems AG

("SQS" or the "Company")

Managed Services contract wins

SQS Software Quality Systems AG (AIM: SQS.L), the world's largest pure play supplier of independent software testing and quality management services, today announces a number of contract wins and contract extensions for its Managed Services division.

The Company has recently won three new Managed Services contracts and extended three existing ones, such that order intake for the Managed Services division has exceeded €50 million in the year to date. A Managed Services contract can be expected to provide improved visibility of earnings and enhanced margins, compared to a traditional project, over the entire lifecycle of the engagement, although it may involve lower margins in the initial phases as the majority of work is carried out by onshore consultants during this time.

Specsavers has selected SQS to deliver a three year Managed Testing Services contract, providing a 50 strong SQS testing team. Based mainly in India the team will deliver end-to-end testing of business applications, from performance through to automated regression test suites, with a focus on raising quality, reducing risk and increasing the throughput of change.

Against considerable competition, SQS has also won a three year Managed Services contract worth €6.5 million with a European telecommunications provider. This is a blended onshore/offshore contract with execution shared between teams in Europe and India.

In addition, SQS has signed a contract with a German logistics company to provide a pilot Managed Testing Services programme.

In terms of contract extensions, a global insurance company has extended its existing Managed Services contract by an additional value of €2 million. The extension came about as the result of a TUPE-type transfer to SQS of the client's former in-house testing team. This team will be complemented with services provided by SQS's offshore test centre in Cairo.

Furthermore, two clients in financial services have extended their now completed pilot contracts into longer term managed services engagements, where SQS will provide testing services for core banking software applications. The combined value of these extensions is €2.3 million.

Rudolf van Megen, Chief Executive Officer of SQS commented, "These contract wins and extensions firmly establish SQS as a leader in the provision of blended onshore/offshore independent managed testing services delivered by a pure play testing supplier. Having only launched our Managed Services division a year ago, we are witnessing considerable demand for its offerings from a wide variety of markets. We are therefore delighted with the performance of the division to date and we are encouraged by a continuing strong pipeline."

The Company is planning to provide an update on trading for the year to 31 December 2010 in January 2011.

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About SQS

SQS is the world's largest pure play supplier of independent software testing and quality management services. SQS consultants design and oversee quality management processes during the software and IT systems life cycle and test the resulting products for errors and omissions.

Headquartered in Cologne, Germany, SQS has approximately 1,800 employees across Europe, Asia, North America and Africa. The Group has a presence in Germany (Cologne, Munich, Frankfurt, Stuttgart, Goerlitz and Hamburg), the UK (London, Woking, Birmingham, Manchester, Belfast), Ireland, the Netherlands, Switzerland, Austria, Sweden, Norway, Finland, India, Egypt, the United States and South Africa. SQS also has a minor stake in an operation in Portugal and a partnership operation in Spain.

With more than 5,000 completed projects, SQS has a strong customer base including 35 FTSE-100 companies, more than half of the DAX 30 and a third of the STOXX-50. It supports clients in a wide range of industries, including major corporations such as Allianz, Beazley, BP, Centrica, Commerzbank, Daimler, Deutsche Post, Generali, JP Morgan, Meteor, Reuters and Volkswagen.