Soon, Asia to fund one-fourth of world's engineering tech services: Nasscom

While US and UK continue to be big spenders, focus of global economy is gradually shifting towards Asia, says IT body

Indian engineering technology services companies need to focus on Asian markets such as Japan, China as one-fourth of the world's engineering and design services investments will come from the region, said industry body Nasscom.
 

R Chandrasekhar, President, the National Association of Software and Services Companies (Nasscom) said the Asian markets such as Japan, China, India would account for 25 per cent of the global spending in the engineering and research and development (ER&D) services and hence, service providers should now look beyond the United States (US).

"Global ER&D spend has remained flat in the past few years. Most of it has been in software. Around 25 per cent of the global ER&D spend will be from Asia before the end of this decade. While US and UK continue to be big spenders; the centre of gravity of the global economy is moving towards Asia," said Chandrasekhar at the 9th edition of Nasscom Design & Engineering Summit.

Businesses across the globe spent an estimated $680 billion in getting ER&D services in 2016 and outsourced roughly 11 per cent of the services.

The software services industry body said the ER&D has been the fastest growing segment in the entire information technology (IT) and BPM industry with a 13 per cent annual growth since 2012. The India ER&D services market is pegged at $24 billion.

Chandrasekhar added that as more companies seek software embedded services across sectors, there would be faster growth in the engineering services sector. "The line between hardware and software is continuously blurring."

Sameer Yagnik, President Global Delivery and & COO, Asia Pacific, Tata Technologies, who is also the head of ER&D Council, said India is the largest services provider for offshore engineering services and the council would increasingly focus on software-led differentiated value proposition.

Industry analysts said growth in ER&D services would also come up from new sectors such as the healthcare and industrial automation and that global outsourcing market could grow between $250 billion and $300 billion over the next few years.

"Automotive is the biggest source of ER&D services with 60-70 per cent share, while aerospace and telecom are two other big industries that are seeking such services. Healthcare, smart factory and industrial automation will be the next big growth areas and the service providers have $250-300 billion outsourcing opportunity to capture," said Pareekh Jain, Senior Vice President, HfS Research India.