The Inevitable Emergence of Digital Engineering

Digital Engineering involves utilizing digital tools and technologies to design, simulate, and optimize products or systems throughout their lifecycle. It encompasses computer-aided design, simulation, and collaboration tools, fostering efficient and innovative engineering processes. Digital Engineering enhances product development by integrating digital simulations and data-driven decision-making into traditional engineering practices.

In recent years, the rapid adoption of Digital Engineering has become a global phenomenon, transcending industry boundaries. According to NASSCOM, the global digital engineering sourcing market is expected to maintain a robust CAGR of ~25% over 2019-2025. This signifies a global surge in the adoption and reliance on digital engineering practices, reflecting an accelerating pace of innovation and technological advancement across industries worldwide. India has positioned itself as a premier destination for providing digital engineering services and aims for a substantial ~US$ 100 billion share in the global Engineering Research and Development (ER&D) sourcing market by 2025. To achieve this ambitious goal, there is a critical need to intensify efforts and swiftly enhance capabilities in the digital engineering domain. This blog explores the unfolding journey of Digital Engineering in India and examines the country’s strategic positioning to leverage this growing trend.

History of Digital Engineering in India

The roots of digital engineering in India date back to the 1950s and 1960s, when the Indian government made significant investments in computing research and development. This led to the establishment of institutions such as the Indian Institute of Technology (IIT), the National Institute of Technology (NIT), and the Indian Institute of Science (IISc) to promote digital technology development. In the following decades, major projects were undertaken to develop digital technologies for various sectors, including space research, atomic research, and defense. The liberalization of the Indian economy in the 1990s attracted foreign investment, accelerating the growth of digital technologies. This period saw the emergence of major IT companies like Infosys, TCS, and Wipro. In the 21st century, India has become a leading hub for digital engineering services, with Indian companies playing a pivotal role in the development of new digital technologies.

Digital India Initiative: Transforming Connectivity, Governance, and Empowerment

Digital India, launched on July 1, 2015, by Prime Minister, Mr. Narendra Modi, is a government initiative aimed at providing high-speed internet to rural areas. Aligned with schemes like Make in India and Startup India, it focuses on digital infrastructure, governance services on demand, and the digital empowerment of citizens. The vision includes inclusive growth in electronic services, manufacturing, and job opportunities. The nine pillars of Digital India encompass areas like Broadband Highways, Universal Mobile Connectivity, Public Internet Access, e-governance, e-Kranti, Information for All, Electronics Manufacturing, IT for Jobs, and Early Harvest Programs. These pillars drive initiatives ranging from improving government processes to promoting electronics manufacturing and providing IT training for job opportunities, contributing to the nation’s digital evolution and transparency.

A Paradigm Shift Towards Digital Engineering

The digital revolution in India has transformed India from a labor-intensive nation to a global technology and innovation hub. The rapid adoption of AI, cloud, blockchain, and IoT has transformed business operations. Government incentives, like a three-year tax holiday for entrepreneurs, and schemes such as the Credit Linked Capital Subsidy Scheme (CLCSS) support technology investments. The favorable regulatory environment fosters a large pool of science and engineering graduates. A few factors that contribute to India’s rise as a Digital Engineering leader are:

• Evolution of Delivery: India has transitioned from a labor arbitrage model to a technology and innovation hub, attracting global organizations for various services.
• Global Players’ Entry: The presence of category-leading global players adopting digital strategies has accelerated India’s digital transformation journey.
• Unrivalled Youth Population: With a large and dynamic youth population, India has become a prominent player in fostering a progressive startup environment and nurturing innovation and technology ecosystems.
• Startup Ecosystem Maturity: India boasts the third-largest startup ecosystem globally, with over 25,000-26,000 tech startups founded between 2011-21, showcasing maturity in innovation, entrepreneurship, and technology-focused endeavors.
• Availability of Key Technologies: The Indian government incentivizes entrepreneurship with a three-year tax holiday in a seven-year period. Schemes like CLCSS provide financial support and interest subsidies for technology investments.

Growth of Digital Engineering in India

Traditional ER&D practices in India encompass designing and developing products, especially in sectors like automotive, aerospace, telecommunications, and healthcare. This involves leveraging a skilled workforce, global outsourcing for cost efficiency, collaboration with international partners, adherence to regulatory standards, and a recent shift towards innovation to meet evolving industry needs.

On the other hand, digital engineering in India is characterized by innovative and creative approaches to technology. It utilizes online platforms and services, prioritizing the creation of customer-friendly products. Incorporating technologies like robots, artificial intelligence, 3D printing, and more, digital engineering aims to enhance technology’s functionality and make it enjoyable for everyone in India.

Further, the transition from Traditional ER&D to Digital ER&D is summarized below:

Traditional ER&D’s share in overall revenue is anticipated to decrease, making way for Digital Engineering to play a central role. The Global ER&D Pulse Survey (2022, NASSCOM and Deloitte) identifies industrial, energy, oil & gas, hardware & electronics, and automotive as key players in ER&D, investing in India for software design, Industry 4.0 solutions, and customer-centric products.

Notably, sectors like BFSI, retail, CPG, and healthcare are emerging in Digital Engineering, leveraging it creatively in both operations and final products. While BFSI, retail, and CPG hold a smaller market share, healthcare commands a significant portion, signifying substantial growth prospects for these sectors in India.

India is positioned as a prominent hub for digital engineering, with its share in ER&D revenue set to substantially increase from the current 28-30%, as highlighted in a Nasscom-Deloitte report. Digital engineering is progressively superseding traditional methods in ER&D, marking a shift in the sector’s landscape. According to the report titled ‘The Future Growth Sectors in Digital Engineering,’ NASSCOM anticipates India’s digital transformation revenue to reach 50-60% of overall ER&D revenues soon. The country’s robust presence in this market is attributed to its expanding talent pool, collaborative environment for partnerships, and supportive governmental initiatives fostering industry growth.

Industry Uses

Digital engineering in India is increasingly being adopted across various industries due to its potential to enhance efficiency, innovation, and competitiveness. Some key uses of digital engineering in India are mentioned below:

MANUFACTURING: Digital engineering, powered by 3D printing, robotics, and IoT, is reshaping manufacturing in Industry 4.0. 3D printing enables on-demand, customized production, reducing inventory needs. Robotics automates tasks, boosting efficiency, and the IoT optimizes processes through interconnected smart devices. This synergy creates a more efficient and adaptive manufacturing landscape. Digital twins are employed alongside 3D printing, robotics, and IoT, revolutionizing Industry 4.0. Digital twins provide real-time simulations of manufacturing processes, optimizing efficiency and adaptive production landscapes.

HEALTHCARE: Digital engineering is transforming healthcare by innovating medical devices, improving patient care, and cutting costs. Wearable devices monitor vital signs, alerting healthcare professionals, while telemedicine provides remote consultations. These advancements underscore the role of digital engineering in enhancing healthcare accessibility and efficiency.

EDUCATION: Digital engineering plays a pivotal role in advancing educational technologies, fostering improved learning outcomes, and enhancing accessibility. Notably, online learning platforms and adaptive software deliver personalized instruction to students, while virtual reality is harnessed to create immersive learning experiences. This underscores the transformative influence of digital engineering in shaping a more sophisticated and accessible educational landscape.

TRANSPORTATION: Autonomous vehicles and digital innovations are revolutionizing the transportation sector, enhancing safety, efficiency, and environmental sustainability. Self-driving vehicles minimize accidents and optimize traffic flow while ride-sharing platforms streamline mobility without individual car ownership. These advancements exemplify the transformative impact of digital technologies in creating a safer, more efficient, and eco-friendly transportation ecosystem. The Transportation sector witnesses the impact of digital twins through their role in optimizing safety and efficiency in autonomous vehicles. Digital twins simulate and monitor vehicle performance, contributing to a safer and eco-friendly transportation ecosystem.

FINANCIAL SECTOR: Digital engineering is elevating financial services, enhancing accessibility, and fortifying security for consumers. Online banking and mobile payment systems facilitate convenient access to financial services globally. Additionally, the implementation of blockchain technology enhances the security and transparency of financial transactions, exemplifying the integration of cutting-edge solutions to elevate the financial industry’s efficiency and reliability.

Overcoming the Challenges

Addressing the challenges of advancing digital engineering entails a multifaceted approach. Firstly, the inadequate digital infrastructure and limited internet access in rural areas pose significant hurdles. High initial costs associated with acquiring digital tools, particularly for small and medium-sized enterprises (SMEs), present a substantial barrier. The solution involves offering financial support, grants, and subsidies to SMEs, along with encouraging partnerships with technology providers for cost-effective solutions.

Another pressing issue is the shortage of skilled professionals proficient in digital engineering tools and technologies. To address this, comprehensive training programs should be established, collaborations with educational institutions fostered, and incentives provided for continuous skill development.

Thirdly, heightened data privacy concerns, especially in industries dealing with sensitive information, call for education on privacy regulations, implementation of secure data management practices, and strict adherence to privacy standards. Collectively, these solutions can pave the way for a seamless transition to digital engineering practices.

Fourthly, The dynamic and fast-paced nature of technological advancements demands vigilant strategies to navigate patent landscapes, ensuring innovation remains safeguarded, and businesses can thrive in a competitive environment.

Lastly, Digital Engineering is an evolving space and hence lacks robust policy and regulatory framework around it. Bridging these gaps is essential to ensure ethical practices, data privacy, and standardization, fostering a conducive environment for innovation and sustainable growth in the digital engineering landscape.

The Road Ahead

Over the last two decades, digital transformation in India has put it at the forefront of digital engineering and the fourth industrial revolution. With more than 500 million people using the internet, India has the biggest market for digital consumers. Further, India is the third-largest place for new companies and also enjoys a robust talent pool. Going forward, India appears to be well-positioned to drive the inevitable rise in digital engineering, fueled by a robust foundation in technology, a burgeoning talent pool, and a dynamic startup ecosystem. As the nation embraces cutting-edge technologies like AI, IoT, and blockchain, sectors from manufacturing to healthcare are undergoing transformative changes. With a proactive approach to innovation and a supportive regulatory environment, India is positioned to lead the digital engineering revolution, steering the nation towards unprecedented growth and competitiveness in the global landscape.