Indian Engineering and R&D Services Industry

Indian Engineering and R&D (ER&D) is coming off age and doing so far more rapidly now to create its own identity within the overall IT segment. Engineering and R&D Services is a ~ $10 B industry and approx 20% of the $50 B industry ( export oriented revenue ) from India http://www.nasscom.in/upload/SR10/ExecutiveSummary.pdf . Engineered in India not only gives tremendous sense of pride to the industry in India, it also provides great confidence to the global technical and engineering community.

Initial foray and success in ER&D by Telecom, Semiconductor, Aerospace and Automotive companies has given substantial confidence to other industry segments like Consumer Electronics, Medical Devices, Computing Systems, Energy and Infrastructure, etc to also start leveraging the engineering prowess and expertise from India. Initial steps of doing context engineering work in a piece-meal way is fast maturing towards full system and product development across industries. Similarly traditional engagement models like time and material or fixed bid has also started to move towards partnership model like revenue share, risk-reward a la skin in the game approach. All of these are signs of emerging maturity and confidence that Indian ER&D industry has been able to deliver to global customers with consistent world-class quality that has not only helped in improving time to market but also provided avenues to create products for new and fast growing markets like India, Brazil, China, etc.

The next decade brings even more exciting opportunities as the technology industry matures rapidly to deliver to an increasing end-customer demand. Consumers and Businesses are asking not only for the core products but the ecosystem of platform, user experiences, services and solutions as well. This will drive companies to invest heavily in expanding the ecosystem around their products much like what Apple has done with iTunes that has fueled the growth iPod, iPhone and iPad. Rise in digital content, convergence, mobility, cloud, ubiquitous apps, localized products, clean tech, smart devices, massive investments in infrastructure are some of the major contributors that will drive not only higher growth for ER&D but will also increase the level of innovation in this sector. So far the segment has been heavily dominated by a services only thinking. With the Indian ER&D industry at $10 B mark, the playfield is large enough to experiment to create impact through innovation.

Expertise, capabilities and mindset have all changed in the last couple of years wrt Indian ER&D and movement of several technology gurus, architects and senior engineers from all over the world to India has only helped this cause to accelerate. It is estimated that of the 150K engineers that work in this sector in India, 5% have come back to India in last couple of years after gaining significant global product development experience. Its important for them to be the “tipping point” of driving innovation in ER&D rather than get set into the current ways of the industry. The industry does provide a good combination of captive centers (global tech companies having their own ER&D centers in India ) and service providers ( companies like HCL etc. ) to be the breeding ground of developing next generation tech thinking. Patents and IPs have certainly gone up in the recent past, however its way below any global measure. Its key that the initial services led growth of Indian ER&D ( that has given its first $10 B ), must be nurtured thru core Engineering and R&D, fundamental research, original product concept and development, effective relationships with the academic institutes and more. This industry is at its cusp and must re-invent itself to drive to next phase of growth.