Cos likely to increase investments in engineering research and development: Survey

There has been a spurt in global capability centres (GCCs) across the country due to increased digital transformation needs, and India being a hotbed for talent. A joint survey by NASSCOM and Deloitte Touche Tohmatsu India LLP (DTTILLP) predicts that organisations with an engineering research and development (ER&D) presence are looking to increase investments in their India GCCs.  

These survey results support the global prediction that ER&D organisations will drive the next wave of offshoring in the country. In fact, one of the biggest drivers for global organisations has been India’s response to Covid-19 over the past two years, where companies had to ensure business continuity and resilience. This combined with the availability of rich talent, digital capabilities, and a diverse start-up ecosystem in India, has also pushed the demand for these GCCs across the globe. 

About 72% respondents with an India GCC plan to step up their investments in 2022; of these, almost half plan to increase this spend by more than 10%, which is a higher than the rise in global R&D budget. 

“The Indian ER&D market is projected to grow at a CAGR of 12-13% until 2025 and this growth story has been well reinforced by the findings of this ER&D pulse survey. With more companies planning to strengthen their presence in the country, the growth prospects for India GCCs and ESPs have grown manifolds,” said Keerthi Kumar, Partner, DTTILLP. 

KS Viswanathan, Vice President, Industry Initiatives, NASSCOM said that companies across geographies are looking to leverage their India GCCs to deliver more activities due to the availability of key skills and talent at scale. Indian GCCs and ESPs are driving end-to-end innovation, product strategy and development, and manufacturing products from India for the world. 

According to the survey findings (drawn after analysing responses from 104 R&D leaders across 19 countries and 12 sectors), more than 75% of the industry leaders have projected the development of Industry 4.0 solutions, and innovative customer-centric products as crucial investment areas for the global ER&D industry in the next three years, while the immediate priority is to develop sustainable products and enable a circular economy. 

According to EY’s GCC Pulse Survey 2021, published in February 2022, 74% of participants are acting as global hubs for digital skills and delivery. Most GCCs see themselves as an incubation engine with structured ideation processes where 68% of GCCs are operationalising their parent organisation’s digital strategies by providing scale. 

“We are increasingly seeing product-based innovation, use of technologies like artificial intelligence and analytics to drive process efficiency and enhanced service portfolio becoming key business drivers,” said Arindam Sen, Partner, GCC Sector Lead-Non-FS, EY India. 

He added that with the abundant skilled digital talent in India and keeping future of work central to their strategy, GCCs can deliver on their digital transformation agenda.