6 December 2023

Innovation remains an essential element for the organic growth of corporations, even the top multinational ones, stimulating and giving an advantage to their competitiveness. In 2022, spending on research and development (R&D) by these companies increased, and with the energy transition, the aging of the population and digitalization, the development and improvement of products, services and processes become even more important, both for companies and society.

According to a compilation published this year by fDi Intelligence, which compiled the Top 100 world leaders in innovation during 2022, around US$ 720 billion were invested collectively by these companies, representing an increase of 15.3% compared to 2021, also configuring a heighten of 40% set side by side to the pre-pandemic year of 2019.

Among these leaders, 47 are broadly defined as technology companies, including those who sell software, computer services and equipment. A quarter (24) of them were in healthcare, englobing pharmaceuticals, biotechnology, and medical devices, and 45 of them were in the United States.

Officially released R&D numbers give a strong indication of the companies that dedicate the most resources to innovation, hiring and investing in professionals and resources in the area. Among them, we can mention Amazon as the world’s largest spender, reporting $73.2bn for the 2022 calendar, which represented an increase of 30% compared with the previous year. The company said that the increase in expenses was due to the growth in spending on technological infrastructure in payroll and costs related to technical teams, which are dedicated to most processes, from software to autonomous vehicles.

The other four “Big Tech” companies, Alphabet, Meta, Apple, and Microsoft, collectively accounted for almost 18% of the $720bn spent, with the greatest investment being in the development of software and hardware, including generative AI, cloud computing, augmented reality, and others.

The reasons for innovating differ between sectors, and the number of them is only growing, considering current technological advances and the increasingly frequent attempts by companies to automate operations – from Big Tech section, Meta, Facebook’s parent company, increased its R&D spending by 43% to $35,3 billion last year, largely due to its huge bet on Metaverse. Furthermore, the company seems dedicated to developing new tools in the long term, defining them in its report last year as products that could only be realized in the next decade – and over the other sectors, things such as artificial intelligence, green hydrogen and the development and improvement of personal electronic devices were heavily invested – with the common objective to develop cutting-edge technologies for their respective industries.

R&D continues to be of paramount importance for all companies, with different paths in different areas, relying mainly on the search for the right environment for development and the government incentives offered by their countries, generally in the form of direct subsidies and tax credits. Thus, the competition between companies and nations creates a crescent need to ensure a place in the forefront of national and international innovation – and despite the risks, as the complexity and diffusion of products and processes grows, spending and investing even more in R&D becomes increasingly necessary.

How can we help you?

FI Group is a global tax consultancy that helps industry obtain tax credits and incentives, with more than 1,700 qualified employees, counting on specialists from different fields, committed to supporting companies of all sizes and in all sectors of activities. With our expertise, FI Group specialists can support your company in identifying qualified activities. We specialize in helping companies finance innovation and secure funding for their R&D activities through the comprehensive management of the R&D Tax Credit.

Source: fDi Intelligence

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