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Innovation as a service involves outsourcing of innovation, research and development activities like new product development, technology upgrades and commercialization support by companies to specialized service providers. Innovation enables companies to explore new opportunities, develop disruptive technologies and gain competitive advantage. With growing complexity of innovation, focus on core competencies and need to reduce costs and timelines, companies are increasingly adopting innovation as a service models. Service providers help clients across various stages of innovation process from ideation and design to testing and marketing. For instance, companies in healthcare industry are using innovation as a service to develop new medical devices, drugs and diagnostic tools in affordable way. Startups and SMEs also leverage external innovation partners to accelerate their growth.
The global Innovation as a Service Market is estimated to be valued at US$ 1.76 Bn in 2024 and is expected to exhibit a CAGR of 17. % over the forecast period 2024 to 2031, as highlighted in a new report published by Coherent Market Insights.
Market Dynamics:
Growing demand for outsourced innovation and R&D services: As mentioned in the heading, companies across industries are outsourcing their innovation needs to specialized service providers in order to focus on core business, leverage external expertise and technologies, and reduce costs and timelines associated with in-house innovation. This growing demand is expected to drive significant growth of the innovation as a service market over the forecast period.
Need for innovation to gain competitive advantage: In today’s fiercely competitive environment, continuous innovation has become imperative for companies to develop innovative products and services, explore new revenue streams, and gain competitive edge over rivals. Innovation as a service helps organizations bolster their innovation capabilities and launch disruptive offerings to stay ahead of the competition. This is further expected to propel the market growth.
Key players operating in the innovation as a service market are Johnson & Johnson (DePuy Synthes), Medtronic plc, Stryker Corporation, Zimmer Biomet Holdings, Inc., Smith & Nephew plc, NuVasive, Inc., Globus Medical, Inc., Wright Medical Group N.V., Arthrex, Inc., DJO Global, Inc., Össur hf., CONMED Corporation, Breg, Inc., Orthofix Medical Inc., Bioventus LLC. Johnson & Johnson and Medtronic capture a major share due to their diverse service offerings and global presence.
Segment Analysis
The global innovation as a service market is dominated by the SME segment which holds around 60% market share. SMEs have limited in-house R&D capabilities and look for external innovation partners to develop new products and services. The large enterprises segment is also growing at a steady pace as companies outsource non-core functions to focus on their core competencies.
PEST Analysis
Political: The governments across major countries are supporting startups and SMEs through various incentives and funding schemes to promote innovation. This is positively impacting the growth of the innovation as a service market.
Economic: High R&D costs and business uncertainties are prompting companies to adopt innovation as a service models for affordable innovation. The growth of digital technologies is also fueling the demand for innovation services.
Social: Younger generations are driving the culture of open innovation. They expect companies to engage in collaborative innovation through platforms and ecosystems. This social trend is benefiting the market.
Technological: Advancements in digital technologies like cloud, AI and IoT are enabling new innovation delivery models involving collaborative platforms, data analytics and virtual collaboration. This is accelerating the adoption of innovation as a service.
Regional analysis: The North American region accounts for over 40% share of the global innovation as a service market led by presence of innovation hubs and major companies in countries like the US. The Asia Pacific region is emerging as the fastest growing region due to rising number of global R&D facilities, increasing spending on R&D activities by Chinese and Indian companies.
Key Takeaways
The global Innovation as a Service Market is expected to witness high growth aided by the increasing spending on R&D activities globally.
*Note:
- Source: Coherent Market Insights, Public sources, Desk research
- We have leveraged AI tools to mine information and compile it
