Engineering R&D (ER&D) Outlook for 2025

In 2024, enterprises faced economic headwinds from recessionary pressures, inflation, high interest rates, and geopolitical tensions impacting supply chains. Despite these challenges, organizations showed resilience by focusing on cost control, value realization, and technology adoption to enhance productivity.

Key Engineering and R&D (ER&D) growth drivers included IoT, connected ecosystems, AI augmentation, and the demand for intelligent manufacturing and software-defined solutions. There were indications of a market recovery toward the end of 2024 due to the reduction in interest rates and the AI boom. The surge in Global Capability Centers (GCCs) and their shift from backend offices to R&D hubs also contributed to the ER&D growth momentum.

In this report, we examine key ER&D verticals and horizontal themes, such as the rise of GCCs, AI, and manufacturing, that will influence enterprise investment priorities in 2025.