As part of its initiatives to promote the growth of the engineering services industry in India, NASSCOM also showcased the landscape of the ER&D sector and how innovations from India are being leveraged for newer avenues of growth.
“Inclusive and Sustainable Growth calls for the use of Smart Technology. Smart Technology can improve living standards without creating environmental damage. The theme of the NASSCOM Engineering Forum centres on the innovative technologies which can transform the world. The NASSCOM Engineering Summit is an annual global event of NASSCOM. We believe that the forum will address many issues which are critical to the growth of Engineering Industry globally,“ said Mr. Ravi Pandit, Chairman, NASSCOM Engineering Services, Pune and Chairman & Group CEO, KPIT Cummins.
According to the present landscape, India is gaining depth in its ER&D capacities offering end to end product development. Indian ER&D services market is expected to exceed initial market projections and is expected to reach USD 40-45 bn by 2020. This exponential growth has been a result of the Indian ER&D services market has witnessed rapid expansion over the last 5 years, flexible business models, short product life cycles, decreasing time to market, flexible capacity driving ER&D sourcing. Growth in this area is being driven by need for new products to meet the growing demand in emerging economies as well as fast evolving customer preferences
Incremental growth for the sector will be driven by newer verticals and markets. Significant opportunity exists for supply base to develop product-based solutions that encompass other service offerings. Domestic Indian ER&D market is expected to add to future growth with infrastructure, automotive, aerospace & energy and increasing focus on promoting local manufacturing.
While the ER&D service has been growing by leaps and bounds, certain challenges grip the space and require immediate redressal. India needs to sustain its cost competitiveness and fill its absence of linkages to manufacturing capabilities. Also, lack of a formal innovation policy and supporting ecosystem will pose a threat to the budding ecosystem. Collaborative action is required to ensure future growth.
Getting to the target of USD 40-45 billion, ER&D services industry will require a four pronged strategy from the supply base. Government needs to help build complete product development ecosystem and collaborate with the industry, in a PPP model, in areas like defense labs, product engineering support infrastructure etc. India also needs to position itself as a global Engineering and R&D hub by enhancing customer outreach and strategic messaging with the key decision makers. There is also a need to accelerate talent capacity and capability in specialized areas by higher cooperation between research institutes, industry and academia for well-rounded skill development.
ER&D SERVICES LANDSCAPE IN INDIA
- India ranks #1 in the global ER&D sourcing industry
- India’s share in global ER&D sourcing revenues is approximately 22%
- ER&D contributes 15% of total USD 60 bn Indian IT-BPO industry
- Global ER&D spending crosses USD $1 trillion
- Number of service providers and captives offering ER&D services from India - 400
- Number of engineers employed by service providers and captives in India is approx. 200K
- Percentage of revenue invested in R&D by Indian service providers is approx. 3.5%
- Cost savings by India based ER&D centres in FY2011 is over USD 20 bn