The pandemic has accelerated digital transformation in organizations globally, and will continue to dictate how they function in the future too. As global enterprises embrace all things digital, there is a convergence of IT and ER&D spend in enterprises. While the IT spend is directed towards the processes and operations of the organizations, the spend on ER&D is aligned more towards the products and services that the organization offers. New-age technologies are being implemented to bolster businesses across industries, and Digital Engineering Service Providers are instrumental in the process.
Digital Engineering will see the fastest increase in spend – a 15-20% rise by 2025, reveals Zinnov’s study. Digital Engineering Service Providers have emerged as an indispensable part of enterprises’ Digital Engineering efforts, making them a critical cog in enterprise digital transformation efforts. This is clearly traceable in the growth of Digital Engineering Service Providers and has led to both Private Equity and incumbent Service Providers doubling down on investments in these SPs.
Zinnov’s analysis reveals that the highest number of Private Equity Investments in the Service Provider space has taken place in the post-pandemic era – with a staggering CAGR of 19.8% from 2015 to 2020. This Zinnov study evaluates the global Digital Engineering Services space by analyzing 3000+ PE transactions in the overall Technology Services segment, including buyouts, growth capital, and add-on acquisitions. The findings bring out the larger picture of the global Private Equity landscape, the increasing focus on Digital Engineering, and other trends within the ecosystem.