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Zinnov, a Houston-based management consulting firm, projects the global digital engineering market will grow by 1.5 times to $1.6 trillion by 2026.

The firms study titled The Inevitable Rise and Impact of Digital Engineering found that digital engineering spend has stabilized at $810 billion, with a consistent CAGR of 22%.

North America will continue to be the top region for global engineering, research, and design (ER&D) spending in 2026, with a projected 55% of the global market. Hi-tech verticals will account for 58% of the digital engineering spend in 2026, followed by services-led and manufacturing-led verticals.

Zinnov notes there are five key digital transformation levers in the market: generative AI (genAI), hyperscalers, platformization, electrification, and software-defined vehicles.

GenAI emerged as the leading tech trend of 2023, and is transitioning from a consumer-focused technology toward significant enterprise adoption. Zinnov expects organizations to quadruple genAI investments over the next three years, with service providers leading the pack.Hyperscalers are large cloud service providers that can deliver computing and storage at enterprise scale. Zinnov says hyperscalers are extending their traditional offerings to including consulting, assessment, migration, deployment, and management as the global cloud market grows toward a projected $1.4 trillion by 2030.

Platformization is the integration of digital platforms in government frameworks, economic sectors and processes, and infrastructures.

The global EV market is shifting to mainstream adoption, with service providers playing a key role in electrification from electric powertrain design to battery development and comprehensive engineering solutions.

Software-defined vehicles (SDVs) is the growing shift to wedging connected, software platforms into vehicles. This allows companies like BMW to charge subscription fees for heated seats, but also opens the doors to autonomous driving, personalized infotainment, and advanced safety features. While in its early stages, SDVs are expected redefine how consumers interact with vehicles.

In the ever-evolving polycrisis, companies need to stay ahead of not just what their customers want but also predict what they might need all underpinned by technology. The global ER&D spend is a reflection of this as businesses worldwide continue to tap into Cloud, Generative AI, Metaverse, 5G, and Digital Thread both for their survival and growth, said Sidhant Rastogi, managing partner at Zinnov.

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Digital engineering spend to reach $1.6 trillion by 2026 - Consulting.us