Bengaluru: India will account for 41% of the global digital engineering services market by 2025, according to report by consulting firm Zinnov.

As of now, India accounts for $10.6 billion of the digital engineering market share which is expected to increase four-fold in five years, according to the report released on Wednesday.

The global engineering R&D (ER&D) spend by organisations worldwide stood at $1.4 trillion in FY2019, and is expected to grow at a CAGR of 8% to cross $2.2 trillion by 2025. During the period, digital engineering spend is expected to grow to $1.2 trillion and account for 53% of the overall ER&D spend.

“India will be a powerhouse to drive digital engineering delivery through both GCCs (global capability centres) and service providers due to a combination of factors like the country’s new-age digital talent pool, coupled with a strong ecosystem of GCCs, ER&D service providers, and burgeoning startups in the space," the report said.

According to the study, software and internet vertical accounts for $160 billion of the $404 billion digital engineering spend, and will eventually account for 46% of all digital engineering spend by 2025.

“In addition to focusing on building new-age products and platforms, software and internet firms seek to expand to areas that were non-core to them before now. As a consequence, they continue to invest in building capabilities around artificial intelligence (AI)/machine learning (ML), augmented reality (AR)/virtual reality (VR), big data analytics, and blockchain," the report added.

The Zinnov study also said that engineering is now a core function in services-led verticals, with digital engineering spend currently accounting for $85 billion. In fact, services-led verticals will contribute one fifth of the global digital engineering spend by 2025. Services-led verticals such as banking, financial services & insurance, media and technology, retail, healthcare payers and providers, and travel and hospitality are rushing to build new products and services to drive differentiation.

Pari Natarajan, CEO, Zinnov, said, “Digital engineering capabilities are key for companies to stay relevant during these times of metamorphosing industry landscapes. Future global ER&D spend will be fuelled by digital engineering initiatives of enterprises across verticals. Nearly half of the global ER&D spend will be from digital engineering initiatives in the next 5 years."

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