Global R&D Pie is worth $170 bn and still not in plate

Pratima Harigunani
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BANGALORE, INDIA: Increased demand for embedded and software content is driving the R&D spend in Hi-Tech verticals. Hi-Tech and ISV segments constitute 35 per cent of top 500 spenders while $170 Billion is the overall addressable R&D globalization and services opportunity, as per some recent findings.


Of the $170 Billion, at present about $55 Billion is the addressed market (including in-house R&D centers and third party service providers) and Indian service providers deliver about $6.9 Billion worth of services which is 27 per cent of the addressed outsourced services market, as unveiled by Zinnov Management Consulting, a Globalization and Market Expansion Advisory firm, which has launched its rating of Global R&D Service Providers’ across geographies.

The study titled “Global R&D Service Providers (GSPR) Rating 2014”, is an annual study to assist business leaders spearheading global engineering initiatives make right decisions in partner selection across geographies.

The study estimated that the overall addressable R&D globalization and services opportunity at $170 Billion as of 2014 but currently only $55 Billion of this opportunity is addressed globally. India’s share of the addressed market is 33 per cent with in-house R&D centers contributing $11.3 Billion worth of services to their parent companies.


The study finds that the Engineering services landscape is undergoing rapid shifts from the perspective of range and nature of services. The global outsourced Engineering services market currently stands at $26 Billion with players from US, Europe and India having an almost equal share. Indian service providers lead the pack amongst the global service providers. As of 2014 the Indian service providers deliver $6.9 Billion worth of services which is 27 per cent of the addressed outsourced services market.

The study estimates that by 2020 the Indian outsourced ER&D services market will reach $15 Billion growing at a CAGR of 13 per cent. This growth will be primarily driven by addressing the increasing demand for embedded systems and software needs across all verticals.

Amongst global leaders in Engineering and R&D services, Wipro, TCS and HCL continue to retain their dominant position in the Engineering services segment. However, the leaders like Infosys, Tech Mahindra, L&T TS, Cyient, Symphony Teleca, Aricent, IGATE and Mindtree are fast closing the gap by diversifying into newer verticals by leveraging their embedded and software capabilities and exploring newer customer segments like first time outsourcers and grow