India’s R&D Market To Reach USD38 Bn By 2020: Study
The R&D spend by global top 500 R&D spenders (G500) is growing consistently at 1.5 percent over the last two years with focus on building digital first R&D organizations, according to Zinnov that released a new study on the global rankings of service providers in the Engineering R&D segment for 2016, ‘Zinnov Zones 2016 - PES’. Amongst the key research findings, the addressable engineering and R&D globalization market potential stands at $215 billion, and that Hi-Tech and ISV Segments Share in Global 500 Spenders as Percentage of Revenue is 34%.
The study also pointed out that India’s Engineering R&D (ER&D) globalization and services market which currently stands at $22.3 billion is expected to reach $38 billion by 2020. Companies from the Consumer / eWeb 2.0 & E-Commerce vertical have significantly increased their R&D spending.
The R&D spending by the Billion Dollar spenders totaled to $471 billion, with five new companies entering the billion dollar R&D spender club this year. It also added that increased demand for embedded and software content is driving the R&D spend. The Global R&D spending continues to stay highly consolidated with top 100 R&D spenders accounting for two-third of the total R&D spend, it read. Laying specifics on the addressable Engineering and R&D globalization and services opportunity, the Zinnov study pegged opportunity to be around $215 billion.
The current addressed market stands tall at $85 billion, of which $34 billion is the Current Addressed ER&D market through offshore in-house R&D Centres, while $51 billion is the Addressed ER&D Globalisation & Services market through outsourcing partners.
Pari Natrajan, CEO of Zinnov shed some light on the key findings of the study saying, “R&D Globalization as a phenomenon is here to stay with locations in emerging economies being the hotspot. Our findings show that the overall R&D Globalisation in Emerging Economies stand at $34 billion.The drivers for outsourcing have changed tremendously over the last year and some newer trends have emerged like the R&D Service providers exploring engineering opportunities beyond Product Development Life Cycle (PDLC) activities; Emergence of End-to-End Full stack Product Engineering Service providers and the Rise of the Global-Shore model, etc.”
With the Total Addressable R&D Globalisation & Services opportunity in 2016 at $232 billion this is estimated to reach $289 billion by 2021. Embedded and Software engineering constitute 76% of the R&D outsourcing addressable market, said the Zinnov report. On the geographical spread it read that India, Western Europe and North America capture 75% of the global Engineering R&D Services market.
Zinnov also conducted an overall ranking of global services players in the Product Engineering space, where it mapped the leading service providers in various segments like Mechanical Engineering, Embedded Systems, Aerospace, Automotive, Computer Peripherals and Storage, Construction and Heavy Machinery, Consumer Electronics, Energy & Utilities, Industrial Automation, Medical Devices, Consumer Software, Semiconductor, Telecommunication and Transport. These global players were ranked on the basis of their R&D Practice Maturity, Breadth, Innovation and Ecosystem Connect.
In the context of Zinnov Zones for Product Engineering Services, the team at Zinnov reached out to a limited set of service providers that could be potential leaders in the space. Their set of inclusion criteria enabled them to then shortlist them and effectively based on which service providers were further invited to participate.
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