Global investments in engineering, R&D to grow at 10% CAGR despite downturn: Bain and Company

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Global investments in the engineering and research and development (ER&D) sector are likely to grow at compound annual growth rate (CAGR) of 10% despite a downturn, forecast Bain & Company.

Enterprises’ global investments in ER&D were set to rise strongly over the next five years, expanding at a CAGR of 10% up to 2026 despite uncertain economic conditions that currently prevailed in the market, said research put out by Bain & Company on Thursday.

A ramped-up pace of investment by industry in digital engineering and related capabilities, as businesses accelerate spending on digitalisation, was central to the strong projected trend in overall investment, it said.

Bain & Company’s findings revealed that the majority of the senior executives (over 500 globally) surveyed plan to increase ER&D spending despite present economic upsets and turbulence. Industries still planning to increase such spending included automotive and mobility, aerospace and defense, medical devices, advanced manufacturing and services, energy and natural resources and telecommunications.

“This increase in ER&D spend, coupled with the intent to increase outsourcing, presents an opportunity to ER&D service providers delivering services from India,’‘ said India-based partner Sudheer Narayan.

Digital investments were set to register a CAGR of 19% from 2022 to 2026 — almost double the overall investment growth rate for ER&D spending, Bain’s survey that gathered responses from over 500 senior executives globally showed.

Tech layoffs could fill the talent gap in ER&D companies, suggested the study.

Providers who invested in talent in high-demand skill areas such as data engineering, data analytics, artificial intelligence, cybersecurity, IoT, and connectivity would be well placed to capture a larger share of this growing ER&D market, Mr. Narayan added.