U.S. Manufacturers Embracing Digital Transformation to Meet Changing Demands, Challenges

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Service providers are aiding the transformation of manufacturing in several industries in the U.S., allowing firms to increase automation, efficiency and resiliency, according to a new research report published today by Information Services Group (ISG), a leading global technology research and advisory firm.

The 2021 ISG Provider Lens Manufacturing Industry Services report for the U.S. finds ongoing changes in the U.S. transportation, technology and industrial equipment sectors, among others, are driving digital engineering advancements with broad implications for U.S. firms.

“U.S. manufacturers, including automotive, chip and industrial equipment makers, are quickly maturing into a digital future,” said David Lewis, partner, ISG Manufacturing, in the Americas. “Service providers play critical roles in making this evolution possible.”

The U.S. automotive industry is undergoing historic change in multiple dimensions and transforming its operations to meet new requirements, the report says. To make strides in vehicle electrification, connectivity, autonomy and security, OEMs are shifting their focus from traditional hardware-driven design and development to software-defined vehicles.

This requires new kinds of vehicle architectures, replicating the cloud computing model in centralized onboard computing platforms that perform many of the tasks previously carried out by electronic control units distributed around the vehicle, ISG says. Functions such as telematics, engine control and advanced driver-assistance systems (ADAS) are centralized, increasing software flexibility and vehicle efficiency.

The off-highway industrial vehicle and equipment sector, which is less digitally mature than the automotive industry, is turning to service providers as partners in building digital foundations for the future, the report says. This market encompasses fleet operations, rentals and leased equipment for agriculture, mining and construction.

Service providers are helping manufacturers in the agricultural, construction and heavy vehicle industries implement automation and shop floor integration to optimize their output, according to ISG. Enterprises are now considering plans for full-scale automation of assembly lines and supply chains, including warehouse and lineside supply.

The consolidation of hi-tech manufacturing companies in the U.S. has benefited outsourcing and offshoring companies, as major service providers already work with most of the largest semiconductor vendors, the report says. The long-term outsourcing partners of these companies become preferred R&D providers. Meanwhile, as companies such as Facebook, Apple, Google and Microsoft begin to design their own chips, they are seeking providers of turnkey services.

Over time, ISG predicts chip manufacturers will offer more software-enabled products and services. These platform-as-a-service offerings will generate recurring revenue for the companies, which today are largely locked into one-time sales of semiconductors.

The 2021 ISG Provider Lens Manufacturing Industry Services report for the U.S. evaluates the capabilities of 38 providers across three quadrants: Digital Engineering – Transportation, Digital Engineering – Hi-Tech, and Digital Engineering – Industrial.

The report names Capgemini, HCL, LTTS and Wipro as Leaders in all three quadrants. It names Infosys, TCS and Tech Mahindra as Leaders in two quadrants each and Cognizant, Cyient, DXC Technology, eInfochips and UST as Leaders in one quadrant each.

In addition, Caresoft (Global) is named as a Rising Star—a company with a “promising portfolio” and “high future potential” by ISG’s definition—in two quadrants. Ignitarium is named as a Rising Star in one quadrant.