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India remains a preferred destination for global engineering research and development (ER&D) sourcing, driven by its vast pool of digital talent, a rich and vibrant ecosystem, and a mature ER&D ecosystem.
India will likely contribute 22 per cent to the Global ER&D sourcing market by FY30. Software, automotive, and semiconductor sectors are expected to contribute over 60 per cent of India’s share of ER&D sourcing by FY30, according to a report by Nasscom and BCG.
Globally, business ER&D spending has experienced a 7-8 per year CAGR from 2020 to 2023. ER&D spending is expected to grow at an 8-9 per cent CAGR from 2023 to 2030 due to stability in the market and emphasis on digital innovation worldwide, the report noted.
Amid the global landscape, India is strategically positioned to claim a significant share of the global ER&D sourcing market. India’s economic value proposition and its capacity to provide talent on a large scale underscore its pivotal role in the overall growth of the ER&D segment. The report reveals that India’s share in the global business ER&D sourcing is projected to increase from $44-45 billion in 2023 to $130-170 billion by FY30.
KS Viswanathan, Vice President (Industry Initiative) at Nasscom, said, “As we navigate the transformative megatrends in this space, collaboration among government, industry, and academia becomes pivotal. Together, we need to establish robust infrastructure, craft effective policies, enhance ER&D skillsets, and provide industry-tailored training, thereby ensuring employability and the highest quality of research, boosting India’s position as the ER&D hub for the world.”
Sector wise
Semiconductor ER&D sourcing share is expected to see the highest jump from 9 per cent share in FY23E to 12 per cent share, to become the third highest contributing sector by FY30. This is further driven by the global push to use India as a base for semiconductor manufacturing, further accelerating a consolidated design plus manufacturing ecosystem in India.
In line with the global sourcing trend, software will continue to retain the highest share, followed by the automotive sector. Furthermore, the report suggests that the industry may find additional growth opportunities within the segment, particularly with support from sectors like aerospace & defence, telecommunications, energy & utilities, etc, said the report.
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