Engineering and R&D is at a turning point.

Rising cost pressures. Longer time-to-market. Global disruptions. Engineering and R&D leaders across industries – from aerospace and automotive to energy and life sciences – face unprecedented challenges.

The stakes are high: In a global survey of 1,500 executives, 44% believe their organizations risk losing significant market share within five years if they cannot accelerate innovation.

The latest research from the Capgemini Research Institute, Engineering and R&D pulse 2026, offers a roadmap for building resilient, responsive operations through digitization, AI, and strategic partnerships. Key insights include:

  • Performance metrics are slipping: 78% report rising engineering costs; nearly half say design and development timelines have increased. Talent shortages, legacy systems, and weak innovation cultures compound the challenge.
  • AI is transforming engineering outcomes: Over 75% of executives expect AI to deliver 20–50% improvements in productivity, time-to-market, and cost reduction. 84% plan to increase AI investment, with China and Japan leading the charge.
  • Preparedness gaps remain: Fewer than one-third feel ready to tackle geopolitical uncertainty, supply chain shocks, and talent shortages – underscoring the need for agility and resilience.
  • Digitization and diversified outsourcing are key levers: Organizations are fast-tracking digital scenario planning and expanding outsourcing models – including performance-based and revenue-sharing partnerships – to boost agility and align with outcomes.
  • Human ingenuity still matters: Despite AI’s rise, only 15% believe it can replace the creativity and problem-solving of human engineers – highlighting the importance of talent development.

Engineering and R&D pulse 2026 is essential for chief R&D officers, engineering heads, CTOs, innovation directors, and senior leaders in finance and supply chain functions. It provides guidance on how to:

  • Apply multiple AI modalities through a structured deployment approach to unlock value at scale.
  • Transform engineering for flexibility to balance cost, speed and agility demands.
  • Broaden access to global talent and invest in workforce development to address talent shortages.
  • Expand the engineering partner ecosystem to unlock capacity for impact.

Download the research brief to discover the trends, organizational shifts, and technology priorities redefining competitiveness in engineering and R&D.

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