Digital Engineering Share In India To Grow Substantially In Future From The Current 28-30% In Overall Er&d Revenues – Nasscom- Deloitte “the Future Growth Sectors In Digital Engineering” Study

Digital platforms and tools have been reshaping connections between businesses, clients, employees, and employers in recent years. Across sectors, industry leaders observed a consistent increase in investments in Digital Engineering (DE) endeavors. India has already been able to establish a strong foothold in this space through its booming talent pool, growing ecosystem for collaborations, and favorable encouragement towards this sector from government institutions. The National Association of Software and Services Companies (NASSCOM) and Deloitte today released the study titled "The Future Growth Sectors in Digital Engineering" to track India's sectoral growth in Digital Engineering, Research & Development.

India today has emerged as a leading destination for Digital Engineering. The share of Digital Engineering in the overall ER&D revenue in India continues to be in the range of 28-30% as of FY22. In the field of engineering, research, and development, digital engineering (DE) is gradually displacing traditional engineering as the main force (ER&D). India has already established a strong presence in this market - thanks to its growing talent pool, developing environment for partnerships, and favorable encouragement towards this industry from government institutions.

India’s rise as a Digital Engineering destination

India is becoming more popular as a location for digital engineering due to a variety of factors. The availability of key technologies like AI, cloud technology, blockchain, automation, and IoT, has transformed how businesses are conducted in India – giving rise to digital strategies for sustainable and smarter ways to operate. Industries such as banking, financial services & insurance, healthcare, consumer packaged goods (CPG), and retail have witnessed a gradual increase in Digital Engineering. Disruptive technologies are currently delivering on their promise to alter these industries and establish them as pillars of the future.

Furthermore, the increasing pool of graduates coupled with a maturing talent ecosystem is helping the growth of the digital talent pool in the country. India offers a large entry-level talent pool of STEM graduates, out of which, there are sizable numbers with AI/ML, cloud, cybersecurity, and 5G skills. Companies have also adopted numerous strategies to increase and improve the quality of talent which includes collaborating with academic institutions to develop digital curricula and building alternate talent pools through targeted skilling programs for people from tier 3/4 cities and other marginal groups.

Debjani Ghosh, President, NASSCOM said, “India is advancing into the fourth industrial revolution with an optimistic Digital Transformation (DE) revenue amounting to 50-60% in overall ER&D revenues in the coming years. The transitory years that passed are responsible for the noticeable rise in the development of the digital infrastructure of the second-most populous nation and largest democracy. India is well-positioned to adopt emerging technologies - thanks to its third-largest startup environment, one of the world's youngest populations, a big pool of science and engineering talent, and attempts to digitally empower society and enterprises."

Sharing his views on the digital engineering ecosystem in India,

Keerthi Kumar, Partner, Deloitte India said, “India is well positioned to take the pole position on Digital Engineering (DE) domain. Being home to the biggest market for digital consumers with over 500 million internet users and with innate technology capabilities, India’s contribution in DE growth story will be significant. DE will play a crucial role in government and industry alike, whether it is for planning or decision making, discovering latest trends or new product creation. However, to realize this potential, a balance between growing technical capabilities and the need for domain and business depth, enhancing India’s data protection infrastructure and patent regulations can further alleviate India’s position as a DE offshoring/outsourcing location.”

Supportive central and state government initiatives such as investments in the country’s technical skill development programs, setting up country-wide CoEs and accelerator programs have contributed significantly to the growth and adoption of this ecosystem. Further promotion of the development of tech clusters, such as BioValley and Medivalley for the medical devices manufacturing and testing of new technologies are also proliferating the Digital Engineering landscape in the country.

Future Outlook

Digital Engineering is anticipated to make up a sizeable portion of ER&D enterprises. While India is on the cusp of taking the lead in Digital Engineering backed by an encouraging regulatory environment and a progressive startup and R&D ecosystem, there are additional steps that can be taken to increase India’s contribution to Digital Engineering. Active collaboration between government, industry and academia to design upskilling/reskilling programs that focus on the DE application in specific industry domains will help create the right balance between growing technical capabilities and industry-specific and soft skills. Further, there is an increasing need to enhance India’s data protection infrastructure to provide increased confidence to Global Capability Centers and Engineering Service Providers to serve global businesses. In addition to the formation of a global standpoint, concerns around patentability criteria and patent maintenance need to be addressed. Lastly, addressing regulatory gaps such as simplifying the requirements for setting up a foreign company center in India, and refining certain ease of doing business limits and parameters will further help boost India’s position as a DE offshoring/outsourcing location.