The Global ER&D Services Shift – Evolution of Engineering and India’s Competitive Edge

The global Engineering Research and Development (ER&D) services industry is fundamentally transforming, driven by macroeconomic pressures, regulatory shifts, and rapid advances in AI, IoT, and digital manufacturing. Enterprises are responding by rebalancing their engineering investments toward high-impact innovation areas such as software-defined vehicles, agentic AI, and intelligent platform engineering. This shift is reshaping sourcing strategies, commercial models, and the global delivery footprint of ER&D services.

India has emerged as a pivotal global hub for ER&D services, offering unmatched scale, skilled talent, and competitive costs. Enterprises are increasingly leveraging India not just for operational delivery, but for co-innovation and IP development in high-growth domains including generative AI and semiconductors. The report outlines how India’s maturing ecosystem – fueled by strong government support, expanding start-up activity, and a digitally skilled workforce – is enabling next-generation engineering solutions. It also highlights the evolution of enterprise-provider relationships, the rise of outcome-based pricing, and the shift to lean, AI-augmented delivery models.