ER&D next growth engine for Indian IT: NASSCOM

BANGALORE, INDIA: NASSCOM, the premier trade body of the IT- BPO industries in India, today said that global ER&D (Engineering Research and Development) spend is expected to touch $1.4 trillion by 2020, and India has the potential to capture US$ 40-45 billion in ER&D services by 2020.

These findings are mentioned in the report, ‘Global ER&D: Accelerating Innovation with Indian Engineering’, prepared by NASSCOM in association with the management consulting firm Booz & Company, which was released today in Bangalore.

This study is aimed at understanding the changes in customer perspectives about ER&D services sourcing, the growth trends in the Indian service provider landscape and the opportunity by 2020, said NASSCOM.

As per the report, the engineering services landscape in India has evolved significantly over the last four years, reflecting maturity, diversification and enhanced verticalization to partner with global corporations.

The report said Indian ER&D services market reflected revenue growth of over 40 per cent in the last three years with 2009 revenues amounting to US$ 8.3 billion and an increase in employee base from 54,000 in 2006 to 150,000 in 2009.

It also said that India's exports revenues from ER&D services would be about US$ 35-40 billion and domestic revenues at USD 4-6 billion by 2020.

Speaking on the launch Som Mittal, President, NASSCOM said India is now an epicenter for global ER&D services with a compelling value proposition, based upon the growing depth and breadth of services, flexible business models, large engineering base and global footprint with greater proximity to customers.

“We are in a creative profession continuously expanding our portfolio from 'art to part' — covering the full spectrum of product development value chain. We are using our strengths by going beyond redesigning products to reengineer the production processes and business models to meet the needs of the domestic market,” said Mittal.

Addressing the media about the key findings of the report, Vikas Sehgal, Partner, Booz & Company, said strategic focus and investment in ER&D has the potential to transform India into an engineering powerhouse and make engineering a key growth driver over the next decade.

“A US$ 40-45 billion industry has the potential to create more than 5 million employment opportunities in engineering and related fields. The report details the scope and size of the global engineering services market and highlights India’s advantageous position in capturing a dominant share in the same,” he pointed out.

The report tracks India’s fast evolving value proposition focused on enhancing cost competitiveness and innovation capacity of the global customer base. The report also assesses the competitive landscape and proposes a set of recommendations that will help India maximize its share of the opportunity.

The study reviews eleven major verticals in detail - Telecom, Semiconductors, Consumer Electronics, Medical Devices, Industrial Automation, Computing Systems, Automotive, Aerospace, Construction and Heavy Machinery, Energy and Infrastructure.

It also reviews India’s performance across the broad range of services including embedded software and hardware design services, testing and V&V, prototype building, engineering analysis and modeling, core product development and design services.