Global ER&D spend is set to touch USD 1.7 trillion by 2020, up from USD 1.4 trillion in 2013:
- Corporate sector spend, driven significantly by the top 2,000 corporates, is forecast to touch USD 850-900 billion (up from USD 700 billion) over the same period.
- Six key trends are driving enhanced ER&D spend across multiple sectors globally - Sustainability, Connectivity, Localisation, Software-led differentiation, Digital engineering and Miniaturisation.
Global Automotive ER&D spend is projected to grow from USD 110 billion to USD 135-150 billion by 2020.
- Sustainability, driver and passenger safety, new features and technologies (for e.g., connectivity, telematics) and platform consolidation will be the key drivers of growth, with focus on embedded systems continuing to gain prominence.
India’s Automotive ER&D exports stood at USD 2.5 billion in FY2015, a 16 per cent share in India’s total ER&D exports. While third-party service providers dominate this market (~65 per cent share), GICs account for the balance.
- While cost arbitrage continues to be an important factor to offshore work to India, customers are increasingly demanding access to emerging markets, localise products and reduce the time-to-market.
By 2020, offshored ER&D market for automotive sector will be between USD 15-17 billion with India’s share expected to grow to 45-55 per cent.
- Cost savings and flexible capacity are the main drivers for offshoring to India; this trend is being given a further impetus by the need for product localisation. India is also emerging as the base for accessing other emerging markets.