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Evolving Service Delivery models in Engineering R&D
Evolving Service Delivery models in Engineering R&D

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Insights in this blog are from NASSCOM-Deloitte 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.

 

The Engineering R&D industry consists of Global Capability Centres (GCCs) and the Engineering Service Providers (ESPs). Both are necessary for the growth of the industry as increasingly both the GCCs and ESPs are being used by global as well as Indian companies for various ER&D activities. GCCs and ESPs have been redefining the way businesses use a diverse talent pool and skillsets distributed across geographies. While they were initially set up with an objective of accessing new talent pools with a cost advantage, over the years they have brought in other value-added benefits as well and they have become strategic hubs for engineering R&D services.

According to NASSCOM-Deloitte Global Engineering R&D Pulse Survey 2022, ER&D GCCs are highly preferred in sectors like automotive and transportation, hardware and electronics, and telecom, while ESPs are favoured in sectors like aerospace and defence, and medical devices. Globally as well as in India, ER&D companies are expanding their footprint and using the services of these GCCs and ESPs and companies expect them to take ownership of end-to-end product management lifecycle, effectively moving them up the value chain.

As per the companies surveyed, there are many reasons why ER&D companies prefer GCCs and ESPs. The top reasons included to improve core business and innovation, scale R&D and technologies, consolidation, skilling, reduce and control cost of operation etc.

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Sector wise analysis

  1. GCCs
    1. 100% of the surveyed companies in the software sector and 70% in the industrial and medical devices sectors have cited scaling of ER&D ecosystem availability and adopting a focused and streamlined global approach to improve productivity and efficiency as key reasons to employ GCCs
    2. 71% of the surveyed companies in the medical devices sector employ GCCs also cited ‘share output of in-house ER&D across products’ through significant discoveries and development of new therapies.
  2. ESPs
    1. Of the surveyed companies, 83% of the companies in the software sector and 63% of the companies in the energy, oil and gas sector state that ‘improving focus on core business and innovation’ is the core reason to leverage global ESPs.

Region wise analysis

  1. For EMEA, reasons for choosing GCCs included scale of the ER&D ecosystem availability with the GCCs and reasons for choosing ESPs included reduction and control of cost of operation.
  2. For North America, reasons for choosing GCCs included sharing of output of in-house ER&D across product lines, while the reasons for choosing ESPs included gaining access to better skills/expertise.
  3. In APAC, ER&D companies chose GCCs for consolidation and standardisation of processes, while they chose ESPs for reducing and controlling costs of operation.

India has also emerged as a popular location for establishing GCCs and also for outsourcing ER&D activities to Indian ESPs, owing to business-conducive ER&D ecosystem, including expertise in right skills, eminent universities to source talent from, cutting-edge start-up culture, and favourable government incentives etc.

 

Read more insights in the report – “NASSCOM-Deloitte Global Engineering R&D Pulse Survey 2022”

NASSCOM Community - https://community.nasscom.in/communities/engineering-research-design/nasscom-deloitte-global-engineering-rd-pulse-survey-2022

NASSCOM Website - https://nasscom.in/knowledge-center/publications/nasscom-deloitte-global-engineering-rd-pulse-survey-2022


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Vandhna Babu
Principal Analyst - Research

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