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Global ER&D Pulse Survey and global demand market insights
Global ER&D Pulse Survey and global demand market insights

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Insights in this report are from Global Engineering R&D Pulse Survey, which spanned a survey of enterprises across North American, EMEA, and APAC regions, with participation from over 100 end user enterprises from eight key verticals across 19 countries.

Post pandemic, we are witnessing a resurgence in growth in the Engineering R&D spend across various companies. 70% of the companies surveyed have already surpassed their pre-Covid spend levels in 2021.

 

Trends in ER&D Spending

Overall trends

As compared to 2021, 80% of the surveyed companies expect their global engineering R&D spend to increase this year. They are also expected to increase their ER&D spend by 10-20% in 2024, compared to 2021. The major driver for rising investments is the need to digitalise products and solutions across regions and sectors. ER&D enterprises continue to invest heavily in Industry 4.0 solutions and other technologies, such as cloud, AI, and big data, to keep pace with the changing competition, and shareholder and consumer expectations.

 

Sectoral trends as benchmarked against 2021 spend

In 2022, the Energy, Oil & Gas, Aerospace and Defence sectors are expected to witness an increase in the ER&D spend by 10-20%. Due to ESG and sustainability initiatives across the board, the energy and the oil and gas sectors particularly are investing in cleaner sources of energy; and therefore, have the highest band of investments amongst all sectors. Some key initiatives include renewable sources research, push towards electric vehicles etc.

 

Reginal trends as benchmarked against 2021 spend

Companies in North America and APAC, on an average, expect spend to increase by 5-10%, EMEA companies are behind, and predict spend to go up by 5%, on an average.

 

Innovation acceleration models

Across companies globally, there is a strong push to shorten innovation cycles and have a faster go-to-market strategy. Traditionally, the organisations used to prefer the organic route, however, post Covid, there have been many routes that organisations are choosing to achieve these goals. Some of them include –

  1. Build in-house – One of the most popular choices of creating products and solutions across all sectors still remains in-house creation in order to control over their IP.
  2. Buy new technology – To accelerate innovation and R&D cycles, ER&D companies are constantly on the look out for newer technologies which helps them to quickly adapt to the newer changes. This was primarily preferred by companies in the medical devices and energy, oil and gas sectors in the survey.
  1. Co-create with start-ups – Start-ups offer the flexibility and agility to create and innovate at a faster rate and are known for their expertise in deep tech like AI/ML, Cloud, IoT etc. Increasingly over the past year, the surveyed ER&D organisations have been collaborating and co-creating with startups, especially in the software products, hardware and electronics, and automotive and transportation sectors.
  2. Co-create with ESPs – ESPs are becoming strategy leaders and taking end-to-end ownership across the value chain. Among the surveyed ER&D organisations, they are also actively co-creating products and solutions with their ESPs and this trend is prevalent in aerospace and defence and industrial sectors.
  3. Co-create with academia – Academic institutions are at the helm of cutting-edge technology, with many developing deep domain expertise in emerging technologies and advanced engineering due to the strong culture of research. According to our Global ER&D Pulse Survey, among the surveyed organisations, companies industrial and energy, oil and gas sectors are leveraging academia to co-create products and solutions. This has been preferred across industrial and energy, oil and gas sectors.
  4. Co-create with competitors – Collaborating with competitors and value chain players to derive synergies and solve sector-level issues is emerging as one of the popular choices for ER&D organisations. Increasingly, creation of sector consortiums and innovation super clusters are emerging to solve industry problems. This has been prevalent across industrial and telecom sectors in our survey.
Pulse survey 1

 

In this Pulse Survey, it has been observed that in 2022 survey, attention has now shifted to ‘driving innovation out of the centre’ from ‘ensuring business continuity’ and ‘ability to drive scale’. India as a destination for ER&D activities is poised to attract the maximum share of R&D budget from companies globally, driven by GCCs and ESPs present in the country.


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Vandhna Babu
Principal Analyst - Research

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