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Engineering R&D moves up value chain, says study

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$8.3-b industry poised to capture revenues of $45 b in 10 years: Nasscom.

Bullish on engg service: (from left) Mr Vikas Sehgal, Partner, Booz & Co; Mr Som Mittal, President, Nasscom; and Mr Krishna Mikkilineni , President, Honeywell Technology Solutions Lab Pvt Ltd, addressing a press conference in Bangalore on Thursday.— G. R. N. Somashekar
Bullish on engg service: (from left) Mr Vikas Sehgal, Partner, Booz & Co; Mr Som Mittal, President, Nasscom; and Mr Krishna Mikkilineni , President, Honeywell Technology Solutions Lab Pvt Ltd, addressing a press conference in Bangalore on Thursday.— G. R. N. Somashekar

Our Bureau

Bangalore, May 20

The Indian engineering R&D (ER&D) services landscape has significantly moved up the value chain and the country is poised to transform into an engineering powerhouse in the next decade, according to a study led by the National Association of Software and Service Companies (Nasscom).

The study, which has been conducted in association with management consulting firm Booz & Co, says the key drivers for this growth are the increased global R&D spends in the areas of automotives, consumer electronics, semi-conductor and telecom, the increasing use of electronics and fuel efficiency and increased consumption in the domestic market.

Changing perception

The changing perception about India as not just a cost arbitrage hub but also a strategic partner focused on innovation is also triggering the $8.3-billion industry towards capturing revenues of $45 billion in just 10 years, with the local market accounting for 10-15 per cent, says the report.

The ER&D market has seen a significant increase in its employee base to 1,50,000 in 2009 from 54,000 in 2006, adds the study on ‘Global ER&D: Accelerating Innovation with Indian Engineering', released at the NASSCOM Engineering Services Conclave 2010 in the city.

“India is fast transcending the price arbitrage driven game and has the potential to emerge as a frugal engineering hub with a focus on low-cost design, value chain optimisation and product development efficiency across sectors,” said Mr Vikas Sehgal, Partner, Booz & Company. While the US will continue to be a big market for India, Japan, Europe and West Asia are also opportunities, he said at a press conference.

Challenges

Mr Som Mittal, President, Nasscom, said there are challenges to sustaining cost competitiveness, low domain capability, the lack of a formal innovation policy and the emerging threat from China and Russia. The need of the hour is to invest in new technology areas to capture new markets and verticals, encourage collaboration between industry and research labs, create innovative clusters and technology parks and bring in changes in curriculum.

(This article was published in the Business Line print edition dated May 21, 2010)
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