BENGALURU: Faster growth of Tesla and other companies disrupting the automotive sector may prove to be a boon for Indian engineering and research & development (ER&D) service providers, says a new study.
That is because disruption in business model and increased focus on research and development propelled by companies such as Tesla, Uber, Lyft, Grab and Ola in the automotive space are likely to lead to a "windfall of deals" in the ER&D sector over the next two-three years, a report by services research firm HfS Research. Companies such as TCS, HCL Technologies, Infosys, L&T Technology Services, Tata Technologies and others are expected to see emergence of automotive as the biggest contributor in ER&D services. This segment broadly provides solutions for connected cars to smart factories of tomorrow, which includes embedded systems, internet of things, product engineering.
"We predict there will be few big deals ($50 million+) in automotive in next two to three years," said Pareekh Jain, senior vice-president, engineering services, at HfS Research.
Early this month, TCS bagged a large deal from French carmaker PSA, which aims to bring in smart cars in the Indian market in a couple of years.
"We expect few more such deals," Jain said. "Factors such as technology change (existing car models to autonomous cars, electric vehicles, or connected cars), high R&D spending, business model disruption, (and) entry of technology companies (like Google and Apple) will push automotive sector to partner with ER&D service providers," he said.
Telecom is currently the biggest taker of ER&D services, a $24-billion industry that employs more than 5.15 lakh people. India's overall IT-BPM industry is estimated at $154 billion.
A sharp rise in number of deals during the past 12 months has turned automotive as the largest contributor in number of deals, noted the HfS Research report.
While automotive firms typically spend about 3-7% of their revenue on R&D, Tesla, the electric vehicle major, spends about 17% of its revenue on R&D, the report noted. This shows how these companies will increase focus on R&D spending to compete in new technologies with companies such as Tesla.
"(Besides) shared mobility with the likes of Uber, Lyft, Grab, and Ola is disrupting the automotive market and can potentially reduce the overall new car market, especially in the high-volume budget car segment. It can transform the B2C car market to a B2B market with bargaining and pricing power in the hands of a few large firms," HfS said.
That is because disruption in business model and increased focus on research and development propelled by companies such as Tesla, Uber, Lyft, Grab and Ola in the automotive space are likely to lead to a "windfall of deals" in the ER&D sector over the next two-three years, a report by services research firm HfS Research. Companies such as TCS, HCL Technologies, Infosys, L&T Technology Services, Tata Technologies and others are expected to see emergence of automotive as the biggest contributor in ER&D services. This segment broadly provides solutions for connected cars to smart factories of tomorrow, which includes embedded systems, internet of things, product engineering.
"We predict there will be few big deals ($50 million+) in automotive in next two to three years," said Pareekh Jain, senior vice-president, engineering services, at HfS Research.
Early this month, TCS bagged a large deal from French carmaker PSA, which aims to bring in smart cars in the Indian market in a couple of years.
"We expect few more such deals," Jain said. "Factors such as technology change (existing car models to autonomous cars, electric vehicles, or connected cars), high R&D spending, business model disruption, (and) entry of technology companies (like Google and Apple) will push automotive sector to partner with ER&D service providers," he said.
Telecom is currently the biggest taker of ER&D services, a $24-billion industry that employs more than 5.15 lakh people. India's overall IT-BPM industry is estimated at $154 billion.
A sharp rise in number of deals during the past 12 months has turned automotive as the largest contributor in number of deals, noted the HfS Research report.
While automotive firms typically spend about 3-7% of their revenue on R&D, Tesla, the electric vehicle major, spends about 17% of its revenue on R&D, the report noted. This shows how these companies will increase focus on R&D spending to compete in new technologies with companies such as Tesla.
"(Besides) shared mobility with the likes of Uber, Lyft, Grab, and Ola is disrupting the automotive market and can potentially reduce the overall new car market, especially in the high-volume budget car segment. It can transform the B2C car market to a B2B market with bargaining and pricing power in the hands of a few large firms," HfS said.
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