Download our latest report on Enterprise Engineering R&D (ER&D) Strategy & Focus and get a comprehensive view of the latest ER&D trends that are disrupting the #engineering landscape. Here are some of the key trends and findings: - The overall global Engineering R&D spend stayed resilient through 2020 and will touch a massive USD 1.9 Tn by 2023. - Digital engineering spend is accelerating across industries and will represent 47% of the total ER&D spending by 2023, underscoring the relevance and criticality of the rapid adoption of #digital technologies across verticals. - ER&D spending by #hitech and services-led verticals will surpass #manufacturing-led verticals by 2023 - Spend on #DigitalEngineering-led initiatives will provide an impetus for future growth amidst #COVID19 headwinds. What does this mean for Technology #ServiceProviders (SPs)? What are the opportunities that will open up for SPs in the wake of this massive spending? How have enterprises across verticals channelized their Digital Engineering spend? To get answers to these questions and more, download the report now: https://bit.ly/3gF9TAK or write to us at info@zinnov.com

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Zinnov Proprietary Confidential 1
Zinnov 2020
Enterprise ER&D Strategy &
focus - “Digital engineering to
build an anti-fragile future”
May 2021

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Zinnov Proprietary Confidential 2
Agenda
Digital engineering pillars – 5G, digital thread, and sustainability engineering
Top 10 ER&D predictions
Expectations from sales leaders
Enterprise ER&D spend priorities and focus on digital engineering
A
Addressed market opportunity
C
D
E
B

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Zinnov Proprietary Confidential 3
USD B
1,504
USD B
1,928
ER&D spend stayed resilient & grew despite COVID-19
1
Digital engineering spend is accelerating across industries and will
represent 47% of the total ER&D spending by 2023
2
ER&D spending by high-tech and services-led verticals will surpass
manufacturing-led verticals by 2023
3
GAFAM+BAT will account for 21% of the digital engineering spend by
2023
4
Services-led verticals will account for 27% of the digital engineering
spend by 2023
5
North America is the largest fastest growing geography in terms of spend;
APAC will pip Western Europe by 2023
6
Global
ER&D
Spend
Global ER&D spend trends
Source: Z1000 database, Zinnov Research & Analysis

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Zinnov Proprietary Confidential 4
997 959 1017
469 545
911
2019 2020 2023E
1,466 1,504
1,928
ER&D Spending has remained resilient despite COVID-19; Digital Engineering will
drive ER&D spend amidst headwinds
LEGACY ER&D SPEND
DIGITAL ENGG SPEND
All figures in USD B
ER&D Spend (2019-23E)
2%
9%
19%
CAGR
-4%
16%
3%
YoY
ER&D spending at an overall level has been resilient and grew by 3%
YoY
Manufacturing-led verticals bore the brunt of the pandemic and de-
grew by -4.6% in 2020
Services and software-led verticals grew by 11% through continued
investments in digital engineering focus areas
The pandemic serves as an inflection point for digital engineering-led
transformation across industries
The wave of adoption of new-age tech such as Tele-X, digital thread,
spatial computing, and contactless will help enterprises be anti-fragile
Source: Z1000 database, Zinnov Research & Analysis *2020 numbers are based on publicly available R&D spend numbers of enterprises in Annual reports in the year leading to March 2021

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Zinnov Proprietary Confidential 5
Digital engineering spend is accelerating across industries…
USD 545B
Digital Engineering Spend (2020)
USD 911B
Digital Engineering Spend (2023E)
19%
CAGR
Automotive
Connected
Vehicles
MANUFACTURING HI-TECH SERVICES-LED
Industrial
Pharmaceuticals
219
39 18
62
29
58
37 33
100
62 53
33
54
27 41
12
19
382
Software &
Internet
Consumer Electronics
Telecommunication BFSI Healthcare*
Retail
Wearables Industry 4.0
Autonomous
Remote Patient
Monitoring
Smart Service
AI/ML 5G IoT
Cybersecurity SDN/NFV AI/ML
Robot advisory Contactless Telemedicine
Fraud Detection AR/VR
Remote
Monitoring
19% 15% 18%
20%
17%
18%
20%
19% 17%
2020
2023E
CAGR
*Healthcare Payers & Providers
Source: Z1000 database, Zinnov Research & Analysis
47%
Digital engineering spend
will account for 47% of the
Global ER&D spend by 2023
19%
CAGR
19%
CAGR
16%
CAGR

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Zinnov Proprietary Confidential 6
…This focus on digital engineering will help high-tech and services-led verticals to
surpass manufacturing-led verticals in terms of ER&D spend by 2023
3% CAGR
AEROSPACE
19% CAGR
RETAIL
20% CAGR
BFSI
23% CAGR
MEDIA & ENTERTAINMENT
17% CAGR
HEALTHCARE*
HI-TECH MANUFACTURING
SERVICES-LED
16% CAGR
SOFTWARE & INTERNET
8% CAGR
SEMICONDUCTORS
8% CAGR
CONSUMER ELECTRONICS
6% CAGR
TELECOM
5% CAGR
INDUSTRIAL
6% CAGR
AUTOMOTIVE
6% CAGR
CONSTRUCTION & HEAVY
36%
10%
54%
39%
13%
48%
ER&D SPEND
2023E
USD 1928 B
ER&D SPEND
2020
USD 1504 B
ER&D spend from Hitech includes verticals such as Computer Peripherals and Storage
ER&D spend from Manufacturing includes verticals such as Energy & Utilities, Mining & Metals etc.
Source: Z1000 database, Zinnov Research & Analysis *Healthcare Payers & Providers

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Zinnov Proprietary Confidential 7
GAFAM + BAT* will account for 21% of the global digital engineering spend by 2023
107
187
GAFAM + BAT – Digital
Engineering Spend (USD B)
Focus on talent for digital engineering
• Scaled up talent for digital engineering across areas
such as AI/ML, UX design, AR/VR, & Cybersecurity
• Amazon, Microsoft and Google opened
development/Innovation centers in US, Western
Europe, Taiwan, India, and Ukraine in the last 12
months
India is the largest offshore location
• India is the largest offshore location for the software
giants
• Bengaluru & Hyderabad are also top outsourcing
buying centers for Microsoft and Google.
2020 2023E
GAFAM+BAT* to
account for almost
half of the
Software & Internet
digital engineering
spend by 2023
Increase in R&D
headcount of
Microsoft and
Google over the
last 12 months
Number of
offshore R&D
centers in India by
GAFAM+BAT*
~50%
10-15%
15+
Source: Z1000 database, Zinnov Research & Analysis
21%
GAFAM +
BAT’s* share of
digital
engineering
spend by 2023
Enhanced focus on vertical integration
• Increased spending on developing chipsets,
connectivity solutions and hardware
• Leading Chinese firms are accelerating efforts in the
healthcare space
*Does not include Apple’s digital engineering spend which is captured in the consumer electronics vertical
Amazon Alibaba Group
Google Facebook
Microsoft Baidu
Tencent

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Zinnov Proprietary Confidential 8
27%
Services-led
verticals’ share
of digital
engineering
spend by 2023
DRIVING THE CORE
58
100
33
53
37
62
14
25
20%
19%
17%
23%
BFSI
Healthcare*
Retail
Media & Entertainment
2020 2023E
2020 2023E
2020 2023E
2020 2023E
• Payments Tech
• Robot advisory
• Telematics based insurance
• Fraud Detection
• Customer Insights & Intelligence
• Contactless
• Transformation of in-store shopping experience
• Omni-channel experiences
• Robotic automation
• Remote patient monitoring
• Diagnosis prediction
• Healthcare robots
• Patient experience platforms
• Physician assistance tech
• OTT
• AI/ML based content recommendation and
tagging
• Targeted advertising using intelligent platforms
BFSI firms to accelerate
digital engineering spend by
2023
1.7X
Retailers have blitz-scaled
their digital transformation
initiatives and increased the
digital engineering spend
amid COVID
1.6X
Uberization of patient care
to drive digital engineering
spend in next 3 years
1.6X
M&T firms to almost double
digital engineering spend by
2023 with a focus on OTT
1.9X
Source: Z1000 database, Zinnov Research & Analysis *Healthcare Payers & Providers
Services-led verticals are blitz-scaling their digital engineering investments through
tele-X and contactless initiatives

9. Zinnov Proprietary Confidential 9
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Zinnov Proprietary Confidential 9
281 270 290
97 110
180
2019 2020 2023E
378 380
471
North America is the largest and fastest growing geography in terms of spend;
APAC will pip Western Europe by 2023
320 302 319
79 91
148
2019 2020 2023E
399 393
467
North America Western Europe APAC
383 374 395
290 340
576
2019 2020 2023E
673 715
972
2%
-4%
18%
13%
8%
1%
-5%
15%
-1%
2%
18%
5%
2%
-2%
19%
17%
13%
6%
Source: Z1000 database, Zinnov Research & Analysis
Top Verticals
ER&D Spend, 2023E
USD 1,928 B
CAGR
YOY
North American enterprises contribute to the largest share of spend geo-wise; The region also has the highest growth
rate given the higher penetration of software & internet firms and will account for 50% of the global ER&D spending by
2023
50%
Rise of APAC APAC lags Western Europe marginally in terms of spend; however given the digital engineering focus of hi-tech firms in
the region it will grow faster and surpass spending by Western European firms in 2023

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Zinnov Proprietary Confidential 10
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