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Growth of global R&D

  • Global spending on R&D has been sustained and is expected to grow by 3.9% in 2013 to $1,498.1 billion.
  • Asia, North America and Europe account for 90% of investment.
  • Germany and France fund 40% of European investment.
  • Different situations in different regions, with investment relatively stable in the West (US, Europe) but growing in Asia, particularly China, continuing a 10-year trend, and in South America.
  • Europe and the US still have solid competitive advantages, particularly in human capital, quality of scientific training and capacity to innovate.

 

Public and private sector R&D
spend, in billions of $
Change
2011 2012 Est. 2013 2011/2012 2013/2012 Poids
North America 440 447.4 454.6 1.7% 1.6% 30.3%
Central and South America 45.4 47.5 53 4.6% 11.6% 3.5%
Asia 487.1 518.6 554.6 6.5% 6.9% 37.0%
Europe 342.9 346.7 349.5 1.1% 0.8% 23.3%
Germany 89.5 90.9 91.1 1.6% 0.2% 6.1%
France 49.6 50.4 50.6 1.6% 0.4% 3.4%
UK 41.4 42 42.4 1.4% 1.0% 2.8%
Italy 24.3 24.1 24 -0.8% -0.4% 1.6%
Spain 20 20 19.8 0.0% -1.0% 1.3%
Sweden 14 14.2 14.5 1.4% 2.1% 1.0%
The Netherlands 13.3 13.5 13.5 1.5% 0.0% 0.9%
Belgium 8.4 8.5 8.5 1.2% 0.0% 0.6%
Rest of the World 78.8 82.3 86.4 4.4% 5.0% 5.8%
Total 1 394.2 1 442.5 1 498.1 3.5% 3.9% 100.0%

Market trends in R&D outsourcing

ALTEN’s market includes all consulting services, technical assistance, fixed-price projects and outsourced platforms in the field of Engineering and Technology Consulting and Information Systems and Technological Networks.

Consultancy firm Pierre Audoin Conseil (Pac) expects the market accessible to ALTEN in France to grow as shown below:

(in € millions) 2011 2012 12/11 2013 13/12 2014 14/13 2015 15/14 2016 16/15
Aerospace and Defence 1020 1020 0.0% 1050 2.9% 1090 3.8% 1133 3.9% 1176 3.8%
Land transport 762 737 -3.3% 737 0.0% 759 3.0% 790 4.1% 829 4.9%
Telecoms and Multimedia 490 485 -1.0% 486 0.2% 501 3.1% 519 3.6% 540 4.0%
Energy and Life Sciences 1185 1120 3.0% 1285 5.3% 1350 5.1% 1423 5.4% 1509 6.0%
Other 1012 1028 1.6% 1080 5.1% 1142 5.7% 1207 5.7% 1276 5.7%
Total Technology Consulting (scope: ALTEN core business) 4469 4490 0.5% 4638 3.3% 4842 4.4% 5072 4.8% 5330 5.1%

The ETC sector, particularly in France, has undergone a major transformation over the last 10 years. The way consultancy and engineering companies work with their clients has developed towards ever greater commitment and more responsibility, up to

and including a sharing of risks. This last approach is restricted to the big engineering firms, which act as industrial partners to large corporates.

The leading ETC companies are becoming technology partners, helping to improve the efficiency of R&D operations and identify potential productivity gains. The requirements to break into this market are demanding and pose an entry barrier for many companies:

  • the ability to deliver research workpackages, which requires tools, processes and project management skills as well as cutting-edge technological expertise;
  • quality and process (cmmi) certifications;
  • a presence at all first-tier suppliers in the sector (equipment and systems suppliers) to streamline the industrial cycle;
  • a presence in all scopes and all countries where the industrial client is active in R&D;
  • positioning across the whole of each business segment, from system specifications to design, testing and going into production;
  • ability to make authoritative recommendations on technological choices and innovation.

Expectations of outsourcing are high. ETC companies must be able to reproduce the client’s engineering environment. This requires healthy financials and an ability to invest in full-scale infrastructure (premises, equipment, software, etc.) where the projects are going to be run. It is also essential to have a strong technical Division to propose the right technological choices during tenders, to steer projects, to manage knowledge effectively and to extract productivity gains for both the client and ALTEN.

This development has been accompanied by a streamlining of supplier listings that gives listed companies greater market share and better long-term visibility. All ALTEN’s listings were reaffirmed in 2012 (including as an EADS a-supplier of engineering services for a four-year term) and it won new listings with high-potential industrial companies (e.g. Huawei – the telecoms equipment supplier).

 

Key figures

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