Mega Trends Shaping Engineering R&D Sector Globally
Published on : Tuesday 05-12-2023
We are witnessing massive shifts in the engineering R&D sector, says Vandhna Babu.
The global Engineering R&D sector has witnessed an accelerated growth post the pandemic. From approximately USD 1.1-1.5 trillion in 2020, the sector had a CAGR 7-8% growth and is expected to reach USD 1.5-1.8 trillion by the end of the calendar year.
The reasons for this steady growth driven by increase in ER&D spend included recovery from the pandemic, which led to improved spending in the sector to bridge market demands, increasing adoption of newer technologies and heightened demand for innovation from consumers.
As the industry is expected to expand and move forward in the coming years, there are some key mega trends which are expected to shape the future of global ER&D spend.
Increasing prominence of Digital Engineering – As the industry has evolved over the years, we have witnessed growing integration of digital technologies with traditional products. Companies are increasingly recognising the improved outcomes both for themselves and their consumers and this has led to increasing business spend.
Climate change and sustainability ambitions being key drivers for ER&D spend – Globally, the changing climate targets and evolving regulations are driving the agenda for reduction of carbon footprint, building sustainable products and adoption of green energy. This is leading enterprises to be more conscious in their efforts to create green products, incorporate greener methods across their entire value chain, thereby increasing the ER&D spending intensity.
AI augmentation and generative engineering – Generative engineering and the increasing use of AI has automated and optimised design and testing across industries, specially automotive, aerospace, and manufacturing, thereby increasing efficiency, and reducing costs. Growing use of generative AI in engineering has contributed to the growth of the sector.
Service orientation – Shift in engineering models – Shifting orientation towards combining products and services is continuing to gain traction across industries, including heavy equipment, automotive and energy, resulting in a shifting service orientation.
Population & skill inversion – Shifting Skills and talent pools – Globally, many developed economies are faced with the challenges of ageing population and skills gaps. This, in itself, is reshaping the ER&D spend patterns and intensity.
We are witnessing massive shifts in the engineering R&D sector and this growth is only expected to rise over the next few years.
Article Courtesy: NASSCOM Community – an open knowledge sharing platform for the Indian technology industry: https://community.nasscom.in/index.php/communities/engineering-research-design/mega-trends-shaping-engineering-rd-sector-globally
Vandhna Babu is Principal Analyst – Research at NASSCOM. Her areas of interest include ER&D, Engineering, Digital, Automotive, Aerospace and Defence, 5G, Cloud, GCC, etc.
