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NASSCOM, Deloitte’s Survey Predicts Higher ER&D Spends In 2022
India continues to be the ER&D destination of choice with over 70 per cent organisations with India ER&D presence planning to increase spend towards their India GCCs and ESPs this year
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A joint survey by NASSCOM and Deloitte Touche Tohmatsu India LLP (DTTILLP) predicts that organisations with an ER&D presence in India are looking to increase investments in their India Global Capability Centres (GCCs) or Engineering Service Providers (ESPs); of these, almost 50 per cent plan to increase investments by more than 10 per cent.
These survey results support the global prediction that ER&D organisations will drive the next wave of offshoring in the country. One of the biggest motivators for global organisations has been India’s response to COVID-19 over the past two years. The proactive strategies adopted by the ecosystem to ensure business continuity and their resilience when faced with the need to scale rapidly, positioned India as the preferred investment destination. This, clubbed with the availability of rich talent, digital capabilities, and a diverse start-up ecosystem for collaboration, has also pushed the demand for India Global Capability Centres (GCCs) and Engineering Service Providers (ESPs) across the globe.
About 72 per cent respondents with an India GCC plan to step up their spend on it in 2022; of these, 50 percent plan to increase this spend by more than 10 per cent, which is a higher than the rise in global R&D budget. Nearly 52 per cent of the surveyed companies with India ESPs plan to increase their spend on them in 2022, and of these, 50 per cent plan to increase this spend in the range of 10-25 per cent.
Keerthi Kumar, Partner, DTTILLP, said, “The Indian ER&D market is projected to grow at a CAGR of 12-13 percent until 2025 and this growth story has been well reinforced by the findings of this ER&D pulse survey. With more companies planning to strengthen their presence in the country, the growth prospects for India GCCs and ESPs have grown manifolds.”
Keerthi Kumar added, “Globally, ER&D in many organisations have started prioritising building a technology ecosystem, developing key skills and talent, and improving the ER&D performance by digitalising the end-to-end product development lifecycle. What is interesting to note is that about 40 percent of such companies, plan to route investments for these initiatives to their India GCCs and ESPs. India is thus poised to be at the forefront of this revolution, playing a crucial role in augmenting the overall R&D strategy of global companies.”
KS Viswanathan, Vice President, Industry Initiatives, NASSCOM, said, “In the last few decades, the engineering R&D sector has really grown by leaps and bounds across the world and has continued to witness impressive growth in revenues. India continues to be the destination of choice for global ER&D. Companies across geographies are looking to leverage their India GCCs to deliver more activities due to the availability of key skills and talent at scale. Indian GCCs and ESPs are driving end-to-end innovation, product strategy and development, and manufacturing products from India for the world.”
According to the survey findings (drawn after analysing responses from 104 R&D leaders across 19 countries and 12 sectors), more than 75 per cent of the industry leaders have projected the development of Industry 4.0 solutions, and innovative customer-centric products as crucial investment areas for the global ER&D industry in the next three years, while the immediate priority is to develop sustainable products and enable a circular economy.