The global landscape for Engineering Research and Development (ER&D) is poised for substantial growth, anticipating a Compound Annual Growth Rate (CAGR) of 8-9% from 2023 to 2030. The surge is primarily propelled by an increasing ER&D focus across various sectors, driven by digital imperatives and the resurgence of Artificial Intelligence (AI).
The specialised segment within the Information Technology (IT) industry has gained momentum, experiencing a robust CAGR of 7-8% in the last three years. Forecasts indicate a significant escalation in total spending, projected to rise from $1.5-$1.8 trillion in 2023 to $2.5-$3.3 trillion in 2030, reflecting a CAGR of 8-9%.
The primary drivers of the growth are expected to be the automotive, software, and healthcare and medical devices industries, collectively contributing to approximately 50% of the global ER&D expenditure by 2030. The trend augers well for India, a key player in the sector. The increased spending by industry participants is anticipated to elevate India’s market share to 22% in 2030, up from the current level of 17%.
ER&D sourcing, whether through captives or third-party providers, is poised for accelerated expansion, projected to grow by an impressive 16%, from $210-280 billion in 2023 to $600-770 billion in 2030. This growth is fuelled by the evolving business models, transitioning from asset-heavy to asset-light paradigms. As reported by businessline, India continues to be a pivotal destination for ER&D sourcing, accounting for a spending share of $44-45 billion in 2023. The country is expected to maintain its strong position, with anticipated sourcing reaching $130-170 billion in 2030.
