Global R&D services outsourcing market up 8.7% to $36 bn in 2015

Medical process outsourcing
Global R&D services outsourcing market rose 8.7 percent to $36 billion in 2015, said Zinnov.

IT service provider Wipro, TCS, HCL and Altran emerge as leaders in the Zinnov Global R&D Service Provider Ratings.

Overall Global 500 R&D spend grew 2 percent to $614 billion in 2015, while $216 billion is the overall addressable market for outsourced engineering R&D services for 2014-15.

Automotive and Software Product companies account for ~30 percent of the global R&D spend, while software product companies saw highest growth in R&D (>15 percent).

Major R&D spend was concentrated in US at 41 percent of the R&D spend, while China recording the highest growth at 23 percent.

Globally service provides addressed $36 billion of the addressable market in 2014-15. Europe based ER&D Service providers lead the market followed by Indian service providers.

Indian engineering R&D service providers grew 12.67 percent outpacing Global engineering services market growth of 8.7 percent.

Global engineering R&D services outsourcing market grew 8.7 percent to $36 billion — dominated by Europe based ER&D Service Providers (constituting 55 percent of the overall market and grew at 7.7 percent).

India based R&D services companies account for ~22 percent of the global addressed R&D services market grew at 12.67 percent. Automotive, medical devices and software products were the key growth verticals for India based R&D service providers.

India’s ER&D services market is expected to reach $15-17 billion by 2020. North America continues to be the largest target market for Indian service providers contributing to 55 percent of revenues.

Companies with mid-sized engineering practice including Tech Mahindra, L&T Technology Services, Cyient, QuEST Global, GlobalLogic, Tata Technologies, Infosys, Mindtree and IGATE are emerging as close competition to the top 4 players in the ESO space.