Ahead of the National Engineer's Day on September 15, the National Association of Software and Services Companies (NASSCOM) and Deloitte, on Wednesday, released a study The Future Growth Sectors in Digital Engineering to track India's sectoral growth in Digital Engineering, Research & Development (ER&D).

India today has emerged as a leading destination for Digital Engineering. In a conversation with CNBC-TV18, KS Viswanathan, Vice President, Industry Initiatives, NASSCOM, said, “Out of the total $100 billion worth of engineering software that gets outsourced, both by global multinational corporations and the service providers, India accounts for about 34 percent of the total outsourcing. We are the largest one, so $34 billion is what engineering export is. This industry employs close to about 800,000 people in the country and it is 55 percent dominated by global multinational corporations and 45 percent by Indian service providers.”

The share of Digital Engineering in the overall ER&D revenue in India continues to be in the range of 28 to 30 percent 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 favourable 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 such as 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.

Debjani Ghosh, President, NASSCOM, said, “India is advancing into the fourth industrial revolution with an optimistic Digital Transformation (DE) revenue amounting to 50 to 60 percent 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."

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Sharing his views on the digital engineering ecosystem in India, Keerthi Kumar, Partner at Deloitte India, said, “India is well-positioned to take the pole position in the 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 to DE's 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 the 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 programmes, setting up country-wide CoEs and accelerator programmes 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 programmes 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.

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