India may soon have its first $1 billion product engineering services company, proving the country's leadership in the space, management consulting firm Zinnov has said in a latest report.
Even as the report did not share the name of the company which may hit this milestone, it said Wipro, HCL Technologies, Tata Consultancy Services, Tech Mahindra and Infosys are 'significantly large' in this segment. These five companies cover most of the R&D activity outsourced to India, the consulting firm said.
“R&D globalization continues to be on the rise, and India and China are garnering a major share of the engineering services revenues,” Zinnov said. “Indian service providers continue to retain the lion’s share of the overall engineering and R&D outsourcing pie - accounting for about 23% of the overall market,” it added.
India's exports in the R&D and product engineering segment are currently at $16.3 billion, but the growth in the segment has remained slower than the pace of the overall IT industry, Zinnov said.
According to Zinnov, the second lot of leaders in the product engineering and R&D space are iGate, L&T Technology Services, Infotech, MindTree and Symphony Teleca. These five firms, “continue to expand their coverage across verticals and are transforming to take on a larger play across all the verticals,” Zinnov said. It also noted that some other companies such as KPIT Cummins, Persistent Systems, and Tata Elxsi have carved a niche in the product engineering and R&D space.
Globally, top 500 R&D spenders invest around $560 billion on the activity. Automotive, software and internet, and electrical and electronics industries remain the top R&D spenders followed by semiconductor makers, and telecom and networking companies.
India has established itself well to tap this area, as 40 percent of R&D centers setup by computer infrastructure companies in the Asia Pacific region are located in India. Over the last five years, 225 new R&D centers have been set up in the country. Additionally, the southern city of Bangalore is the only location in the Asia Pacific region that has R&D centers for all major telecom and networking companies.