4 Key Trends in Industrial R&D

In general, companies will use AI increasingly to improve efficiency and to create new revenue streams. However, the simultaneously accelerating technological evolution and deepening talent shortage are pushing companies to outsource more R&D activities. In addition, a modular design approach enhances flexibility. Regulation and customer demand pushes companies to invest in making their products and operations more sustainable.

Integration of AI is poised to revolutionize R&D processes, enhancing efficiency and enabling faster innovation cycles. AI and machine learning (ML) have been used for over two decades, but the rise of generative AI and the digital transformation in manufacturing industries bring unprecedented opportunities.

R&D teams can use AI combined with product design applications to enable automatic creation of designs, advancing the development of new products. This can reduce the need to build physical prototypes. Developers and engineers can even describe their vision verbally to an AI assistant, which can then propose a product design.

AI-driven analysis boosts the creation of digital twins, which simulate processes and products and enable identifying potential problems. Digital twins can assist both the original R&D phase and the design of upgrades.

In product engineering, R&D outsourcing is becoming a key strategy for several reasons. It is an efficient way to bridge talent gaps as it allows quick access to expertise, especially in areas like AI, IoT, cyber security, and other technologies in high demand. Maintaining a highly specialized in-house R&D team can be expensive, particularly with fluctuating project demands.

A growing number of companies prefer to use partners that provide full stack R&D as a service, including both hardware and software of products.

Having an outsourced R&D partner can give a competitive edge to companies in fast-paced industries. Outsourcing offers flexibility, cost savings, and faster access to specialized expertise, speeding up time to market.

Also, the increasing cyber threats and regulations, such as EU’s NIS2 directive, push companies to
outsource R&D. Very few organizations can hire developers who are also cyber security experts.

Adoption of modular design is driven by several factors, including the need for increased flexibility, cost reduction, resilience in supply chains, and efficiency in product development and production. Breaking down products into interchangeable modules enables developing, testing, and manufacturing them separately.

This approach can accelerate development processes and support outsourcing of different modules from R&D to manufacturing to specialized partners. With modular design, companies can easily add, modify, or replace components without the need to redesign and retest the entire product. This allows swift reactions to end-customer trends, changing regulation, or market-specific needs. Going modular also enables extending the product lifecycle easier than with non-modular design, reducing the product’s environmental burden.

Tightening environmental regulations and growing consumer demand have made sustainability acritical driver of R&D in manufacturing and engineering. For instance, the EU taxonomy regulations require plenty of work in several key industries to ensure compliance.

Companies must develop eco-friendly products and processes that optimize energy use, reduce carbon footprints, and minimize waste. Digitalization plays a key role by enabling comprehensive energy management and environmental reporting across operations.

Outsourcing partners with sustainability expertise are in high demand as companies are looking for ways to pursue more sustainable operations, product development and ensure compliance with environmental, social, and governance (ESG) goals. This also closely links to managing legacy products, where R&D outsourcing will become increasingly important.

Despite only one trend being directly about outsourcing, every other trend increases the need to outsource or makes it more attractive. R&D outsourcing will continue to grow, becoming a strategic tool for companies aiming to stay competitive and innovative.

Curious to know more about R&D as service, modular design, AI, sustainability, and other aspects affecting product development? Check out our guidebook about R&D here!