India's Engineering and R & D (ER&D) services market is projected to reach USD 40-45 billion by 2020, with export revenues of USD 35-40 billion and domestic revenues at USD 4-6 billion, and to be the next growth engine for 'desi' IT-BPO industry, according to a study unveiled here today.

Infrastructure, aerospace and energy are expected to contribute more than 80 per cent of the domestic revenue, said the study "Global ER&D: Accelerating Innovation with Indian Engineering", released by National Association of Software and Services Companies (NASSCOM) in association with management consulting firm Booz & Company.

Indian ER&D services market reflected revenue growth of over 40 per cent in the last three years with 2009 revenues amounting to USD 8.3 billion and an increase in employee base from 54,000 in 2006 to 150,000 in 2009.

"India is now an epicentre for global ER&D services with a compelling value proposition, based upon the growing depth and breadth of services, flexible business models, large engineering base and global footprint with greater proximity to customers", NASSCOM President Som Mittal told a press conference on the sidelines of the "NASSCOM Engineering Services Conclave 2010".

Major growth triggers have been identified as: continued ER&D investment critical for innovation and penetrating new markets; increasing use of electronics, fuel efficiency/ alternate fuels and convergence of technologies driving future ER&D spend; greater focus on emerging markets resulting from rise of a new consumer segment with varied requirements.

The study said global ER&D spend surpassed USD one trillion in 2009 and is expected to touch USD 1.4 trillion by 2020.

Automotive, consumer electronics and telecom are the top spenders on ER&D.

Partner, Booz & Company, Vikas Sehgal, said a USD 45-45 billion industry has potential to create more than five million employment opportunities in engineering and related fields.

However, it said collaborative stakeholder action would be imperative to achieve USD 40-45 billion industry in 2010.

"Focused investments are required to capture new markets, deepen capabilities within verticals and build services portfolio across the product development value chain", the report added.