Notwithstanding headwinds such as economic downturn, chip and talent shortages, the global engineering and research and development (ER&D) industry is expected to grow at a compounded annual growth rate (CAGR) of 6-7 per cent to reach $1.7 trillion by 2025.
The industry size has gone up by 5.7 per cent in 2021 to cross the $1.3 trillion mark, according to a report prepared by Cyient. The report ‘ Mirror into the Megatrends—technology-Driven Disruptions That Will Define This Decade’ throws light on the contours of these technologies and the likely impact that they could make.
Five key trends
Prepared by research firm Everest group for Cyient, the report observed that the technology landscape in the next decade will predominantly driven by the five key trends — Industry 4.0 and smart operations; Intelligent and meta mobility; digital healthcare; sustainability; and space systems.
The report pointed out that digital engineering and spending on technologies such as data analytics, artificial intelligence (AI), machine learning (ML), Internet of Things (IoT), 5G and cybersecurity will account for much of this growth.
Enterprises will have to invest in these technologies in order to digitalise their products, meet rapidly evolving customer expectations, and increase operational efficiencies. Digital technologies have emerged to be the most significant feature in products today, accounting for about $360 billion or over 27 per cent of the overall ER&D spending last year.
“Digital is driving overall engineering growth. Over the next four years, digital engineering will grow at about 12 per cent, far exceeding the rate at which spending on traditional engineering is expected to grow (which is growing at 4 per cent),” it said.
Industry 4.0
The report said that Industry 4.0 has been around for a while now with enterprise spending crossing the $100-billion mark in 2021. “This is likely to grow at a CAGR of 15 per cent to touch the $180-billion mark by 2025,” it said.
According to the report, its early adopters have focused on hyper-automation and augmented reality- virtual reality-based remote assistance to reduce costs, ensure worker safety, and keep factories operational through lockdowns.
Intelligent and meta mobility
The second major trend that the report highlighted is ‘Intelligent and meta mobility’, which is going to disrupt the transportation space. Autonomous, Connected, Electric, and Shared Mobility (ACES) technologies are the key technology-driven mobility themes that are enabling alternate mobility, and new business and revenue models for enterprises.
In the automotive industry, the four ACES themes together account for close to 40 per cent of the overall automotive engineering spend (about $75 billion). This is expected to grow at a CAGR of 20 per cent in the next three years.
Digital healthcare
As of 2021, ER&D spending in this area was over $45 billion, which will grow at a CAGR of 20 per cent in the next five years. “Healthcare is being consumerised, creating opportunities for new entrants from non-healthcare industries to invest and offer convenience at a low cost and outdo industry incumbents,” it said.
The digital healthcare market includes enterprise spending on telemedicine, virtual health services, life sciences, and digital and connected healthcare devices.
Sustainability
The applications of sustainability cut across industries, but manufacturing, oil and gas, shipping, agriculture and mining are leading the way by making significant use of digital technologies to monitor and implement sustainable solutions.
Space systems
Between 2020 and 2022, multiple start-ups have made significant progress across various stages of the satellite systems value chain. Privatisation is expected to play a major role in not just satellite launches, but also the launch of private space stations and extraterrestrial missions.
“The global space economy is estimated to be worth more than $350 billion and is expected to grow at a CAGR of about 5 per cent in the next few years,” the report said.
Takeaways for enterprises
The report wanted the enterprises to chalk out a strategy to tap the opportunities around these major tech trends.
“They should identify relevant megatrends for your industry, and invest in pilots to demonstrate a clear return on investment. You should focus on the processes in order to avoid silos and ensure close collaboration between engineering teams to avoid wastage and realise improved efficiencies,” it recommended.
Besides ensuring the availability of skilled talent by investing in hiring and upskilling to reap the benefits, enterprises should invest on relevant digital technologies to enhance their products and processes. It also wanted the organisations to engage with ecosystem players to build capabilities, fill gaps, and accelerate time-to-market strategies.
Published on
September 13, 2022
