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Global R&D Service Provider Ratings 2014
The 2014 Global Service Providers Ratings report highlights a rising trend in global engineering and R&D spending, projecting a total addressable market of $170 billion in R&D globalization and services, with India's market expected to reach $38 billion by 2020. Key service providers are diversifying into new verticals such as medical devices and industrial automation, while utilizing strategic partnerships and innovation to meet client needs. The report evaluates companies based on their capabilities, financial stability, and overall service delivery in a competitive landscape.
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Global R&D Service Provider Ratings 2014
- 1. Global Service ProvidersRatings -2014 25th September, 2014 This report is solely for the use of Zinnov Client and Zinnov Personnel. No Part of it may be quoted, circulated or reproduced for distribution outside the client organization without prior written approval from Zinnov. 1
- 2. 2 Global EngineeringR&D Landscape Key Trends in Global Engineering & RD Services GSPR – 2014 Rating
- 3. 3 $577 Billion G500 R&D spend in 2014 Global Engineering R&D Landscape Key Trends in Global Engineering & RD Services GSPR – 2014 Rating
- 4. R&D spend continuesto be on the rise with focus on building better, faster and smarter products FY 2014 577 Billion R&D spend by Global 500 companies USD 110 BN USD 68 BN USD 59 BN USD 48 BN USD 45 BN Automotive Electrical & Consumer Electronics Telecom & Networking Software and Internet Semiconductor Volkswagen Toyota Motor General Motors Robert Bosch Honda Motor Ford Motor Daimler BMW Nissan Motor Denso Samsung Electronics Panasonic Sony Canon Hewlett-Packard Apple Toshiba Fujitsu Fujifilm Mitsubishi Electric Microsoft Google IBM Oracle Amazon.com SAP EMC eBay Facebook Electronic Arts Nokia Cisco Systems Ericsson Huawei Technologies Alcatel-Lucent NSN NTT Research In Motion Telefonica ZTE Intel Qualcomm STMicroelectronics Broadcom Texas Instruments Renesas Taiwan Semiconductor AMD Applied Materials Nvidia Source: Zinnov Research and Analysis 4
- 5. The addressable Engineeringand R&D globalization and services opportunity stands at USD 170 billion Total Addressable R&D Globalisation & Services opportunity Addressable Market* USD 170 Billion Addressed Market USD 55 Billion Total Addressed R&D Globalisation and Services Market Current Addressed ER&D market through offshore in-house R&D Centres USD 29 Billion Addressed ER&D Globalisation & Services market through Outsourcing partners USD 26 Billion *Opportunity Includes market for Captives , Offshore R&D Service Providers and Onshore R&D Service Providers 7
- 6. 6 Global EngineeringR&D Landscape Key Trends in Global Engineering & RD Services GSPR – 2014 Rating $38 Billion by 2020 India’s ER&D services and Globalization revenue (Expected) India Engineering R&D Landscape Source: Zinnov Research and Analysis
- 7. India’s ER&D globalizationand services market is expected to reach $38 Billion by 2020 Product Engineering Services Growth Rate ( In USD Billions) USD 16.56 BN USD 18.20 BN Growth rate 9.9% Growth rate (Expected) 12.05 % USD 38 BN FY 2013 FY 2014 FY 2020 (E ) Note 1: There is an increase of $264 Million to the overall numbers for 2013 because of a revision in the Automotive vertical numbers, we have corrected the estimates for 2013 retrospectively. Note 2: The estimated growth does not include Defense All figures in USD Billion $6.193 $6.887 $10.372 $11.312 Growth 9.06% Growth 11.20% Service Providers Service Providers In-house R&D Centers In-house R&D Centers FY 2013 FY 2014 • Service provider growth driven by entry of existing players into newer verticals • Verticals like Medical Devices, Industrial Automation and Energy and beginning to adopt outsourcing aggressively • New In-house R&D centers are in incubation stage, growth through ramp-ups will reflect in coming years Source: Zinnov Research and Analysis 7
- 8. 8 Engineering Servicesis getting re-defined Global Engineering R&D Landscape Key Trends in Global Engineering & RD Services GSPR – 2014 Rating
- 9. 9 aggressively pursuingthe “in-country sourcing” opportunity exploring newer customers segments for added growth building deep solution capabilities for the connected world collaborating with start-ups to drive innovation The Product Engineering landscape has evolved and Service providers are responding to the change by…. diversifying into newer verticals because of reduced entry barriers Source: Zinnov Research and Analysis
- 10. 10 Indian Companies Leaders in the ER&D Services Global Engineering R&D Landscape Key Trends in Global Engineering & RD Services GSPR – 2014 Rating
- 11. Zinnov’s GSPR isbased on a proprietary framework that effectively quantifies qualitative data and subsequently uses a AHP model 11 Methodology Data Point Classification AHP & Rating Scale 1 2 3 4 5 AHP is a statistical model used for assigning weights to the dimensions and the data points. Rating point of 1 to 5 was decided for each data point based on criteria Classification of company and vertical specific data points available from various RFIs Ranking & Zones Data Extraction & Rating Score Rank Look-up For all data points extracted from RFIs, corresponding rating was mapped in the Rating Scale Companies were ranked based on the scores arrived from the previous steps, using the parameter based modeler. The vertical specific characteristics were then included to plot the companies in Zinnov Zones AHP Rating Scale Data Point 1 Data Point 2
- 12. The GSPR ratingis done by evaluating the participants across pre-identified key performance parameters 12 Human Capital Human Capital is critical in analysis of company’s capability to deliver specific engineering needs. We considered vertical wise and overall headcount, distribution by product development breadth, experience level, and special/additional qualifications Capabilities & Innovation Capabilities of the organization is assessed to understand the overall ability of the vendor to deliver on the requirements of clients; it encompasses people dimension, operational capability, business models employed, Innovation & IP / solutions / Frameworks / Products built / delivered by the organization Financials Financial Strength of a company plays a key role in the assessment process; apart from showcasing the financial health of the organization, it also contributes in analyzing the ability to scale, invest and potential of the vendor to support the customer’s growth Ecosystem Linkages Strategic partnerships with OEMs and industry leaders, University connects for research, membership and contribution to global development forums tell a lot about the provider’s capability in harnessing the ecosystem in R&D and product engineering space and hence is an important criterion in evaluation Infrastructure Infrastructure investment (Labs, ODCs) demonstrates capability and commitment to growth. Also, geographic spread and expansions throws light on the ability to leverage geo specific advantages. Investments in certifications and adoption of standards have strong bearing on determining the processes orientation that is needed for delivering on remote product engineering and R&D activities Business Sustainability Client relationships, engagement model maturity with the customers, the ability to articulate and create a USP and the Governance Risk and Compliance status are indicators of sustainability. We used these parameters to assess the sustainability index of the partner, which help customers differentiate long term players from others R a t i n g P a r a m e t e r s R a t i n g P a r a m e t e r s
- 13. Zinnov Zones –Overall Rating Model 13 • Emerging Companies with Presence Across Multiple Verticals • Focus on Building Competencies Across Multiple Verticals • Developing Cross PDLC Competencies across multiple verticals • Emerging Companies in Niche • Focus on Building Niche R&D and Vertical Competencies • Developing Cross PDLC Competencies in Focus Verticals • Market Leaders across verticals • Presence Across Multiple Verticals • Strong Focus on IP Creation, Innovation and Ecosystem Linkages across most verticals • Excellent Breadth and Depth of Services across most Verticals • High Scalability across most verticals • Market Leaders in Niche Verticals • Well Established Competency in One or Two Verticals • Excellent Breadth and Depth of Services in Focus Verticals • High Scalability in focus verticals Emerging Established Scale, # of Verticals serviced, Client Spread Expansive Niche Verticals Specialization, R&D Practice Maturity (depth and breadth of services), Innovation & IP, Eco-System Linkages What has changed? • The Y-Axis earlier was a function of vertical coverage. • In 2014, the Y-Axis is a function of 3 key parameters (Scale, Vertical Coverage and Client Spread) • The additional dimensions were added based on customers feedback to bring more granularity • The Y-Axis should not be compared to GSPR 2013 ratings on a like for like basis
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- 15. 15 VERTICAL WISERATING
- 16. ZINNOV ZONES EXPLAINED 16 Nurture Zone Breakout Zone Execution Zone Leader Zone Challenges Attributes Recommende d Initiatives • New entrants, providing skill sets to supplement R&D bandwidth • Presence in only a few verticals: Focused growth • Innovation, if at all, in process optimization • Limited number of clients • Typically work in T&M model • Acquiring new customers., diversifying revenue • Building product engineering competencies • Developing Engineering Services specific Sales organization • Understanding the differences between PES/ IT Service business • Focus on targeted customer segment and vertical • Build technology competency in niche focus areas • Focus on building credibility by delivering on initial projects • On the way into big league, delivering R&D services effectively • Presence in two or more verticals • Innovation frameworks resulting in tangible benefit to customers • Typically work in T&M and Fixed Price model • Acquiring large customers • Growing existing accounts and repeat business • Developing across the PDLC competencies • Building domain capabilities • Building a product engineering culture within the organization • Focus on PDLC Skill Development • Focus on augmenting domain skills • Work on building trust with existing customers • Capable of delivering complete product development as a true engineering partner • Presence in almost all verticals • Reusable IP’s built, and benefits quantified • Capable of working in all models, including Risk Reward and Revenue Share • Growing small accounts into deep relationships • Building Concept to Market Capabilities with deep domain expertise • Building relevant IP’s • Executing on new & innovative business models • Limited self owned R&D infrastructure • Focus on IP creation; create vertical agnostic IPs • Focus on Account Mining and execution on new business models • Focus on internal and external innovation incubation efforts • Capable of performing concept to Go-To-Market for the product • Presence in almost all verticals • Formal innovation culture, resulting in IP’s and numerous tactical innovations • Capable of working in all models, including Risk Reward and Revenue Share • Succeeding as go to market partner in emerging markets • Building end to products of their own • Building product management capabilities • Scaling new vertical practices in R&D services to drive continued growth • Scaling R&D infrastructure • Focus on end customer of customers • Drive customer led innovation • Build strong Go-To-Market capability to become viable channel partner for customers
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- 19. 19 COMPUTER PERIPHERALSAND STORAGE - 2014
- 20. CONSTRUCTION AND HEAVYMACHINERY - 2014
- 21. 21 CONSUMER ELECTRONICS- 2014 Zinnov Zones – Leading Service Providers Source: Zinnov Research and Analysis
- 22. 22 ENERGY -2014 Zinnov Zones – Leading Service Providers Source: Zinnov Research and Analysis
- 23. 23 INDUSTRIAL AUTOMATION- 2014
- 24. 24 MEDICAL DEVICES- 2014 Source: Zinnov Research and Analysis
- 25. 25 OUTSOURCED SOFTWAREPRODUCT DEVELOPMENT – ENTERPRISE SOFTWARE Source: Zinnov Research and Analysis
- 26. 26 OUTSOURCED SOFTWAREPRODUCT DEVELOPMENT – CONSUMER SOFTWARE Source: Zinnov Research and Analysis
- 27. 27 SEMICONDUCTOR -2014 Source: Zinnov Research and Analysis
- 28. 28 TELECOMMUNICATION -2014 Source: Zinnov Research and Analysis
- 29. 29 TRANSPORT -2014 Source: Zinnov Research and Analysis
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