India, over the past decade, has transformed at an immense pace from being a cost centre for global technology companies to ultimately become a value creator. Now, emerging disruptive technologies, evolving markets and changing consumption patterns are constantly challenging global companies whose R&D centres are mostly home to India. Therefore, our country is expected to be at the forefront of the digital engineering delivery services market led by its new-age and young digital talent pool.
According to a recent report by Zinnov which is a global management consulting and business advisory firm, India is all set to account for 41% of the global market for digital engineering services by the year 2025. India is expected to increase its market share by four-fold in five years in the domain of the digital engineering market which currently stands at $10.6 billion as mentioned by in the report published on Wednesday.
The report further went on to remark that India is to become an absolute powerhouse and will be the forerunner of digital engineering delivery through GCCs (global contact centres) as well as service providers. It would be possible with the help of our country’s new-age budding talent resources clubbed with a strong ecosystem of GCCs, ER&D service providers, and an increasing number of startups in the space.
The spend for global engineering R&D (ER&D) by organisations all over the world stands at $1.4 trillion as of the financial year 2019 and is expected to easily cross $2.2 trillion by 2025 by growing at a CAGR of 8%. Digital engineering spend is projected to grow to $1.2 trillion and account for 53% of the overall ER&D spend during this period. The study also highlights the fact that verticals related to software and internet accounts for $160 billion of the total $404 billion digital engineering spend, and is all set to eventually account for 46% of all digital engineering spend by the year 2025.
As software and internet firms are constantly seeking to expand to areas that do not belong to their core competence as of right now, they are continually investing in trying to build capabilities around artificial intelligence (AI)/machine learning (ML), augmented reality (AR)/virtual reality (VR), big data analytics, and blockchain other than focusing on building new-age products and platforms.
The Need For Digital Engineering in 2020
Chief Executive Officer of Zinnov, Pari Natarajan said that digital engineering capabilities will allow companies to stay relevant during these times of rapidly changing industry landscapes. He also said that future global ER&D spend will most certainly be fuelled by digital engineering initiatives of organisations across all verticals and therefore, nearly half of the global ER&D spend is expected from digital engineering initiatives in the next five years.
Large R&D spenders are increasingly facing disruption from digital natives like that of Uber and Airbnb. Therefore, this disruption has forced these large companies to rethink their product strategy as digital has gone beyond being just a buzzword to permeate into almost every vertical. Digital products, digital services, digital solutions have become the new normal, with digital increasingly defining the core of companies. It has become absolutely imperative for companies to have a digital strategy to survive and thrive in this increasingly disruptive new-age era.