Global Engineering Services Outsourcing Market by Service (Testing, System Integration, Designing, Prototyping) and Region (North America, Latin America, Europe, Asia Pacific and Middle East & Africa), Forecast To 2028

Summary of the Report

In 2020, the global engineering services outsourcing market was worth USD 1.06 trillion. The market is expected to grow at a compound annual rate (CAGR), of 22.9% between 2021 and 2028. It is expected that the growing collaboration between Engineering Service Providers and Original Equipment Manufacturers will be one of the main factors driving the rise in engineering services outsourcing (ESO). Globalization in R&D, rising demand to integrate the latest technologies into product offerings, and growing need to reduce product lifecycles, as well as the increasing need to cut costs, are all expected to drive the market. ESO has evolved continuously due to the increasing emphasis on outsourcing services by clients as part of their efforts to reduce costs.

ESO has been evolving to provide smart solutions for clients. The market has seen a paradigm shift away from core-engineering to embedded engineering services, such as automation, analytics and the Internet of Things (IoT). Meanwhile, advances in technology have paved the way for products-as-a-service engineered with integrated IT solutions capable of scheduling maintenance and preventing unexpected outages by predicting those in advance. Globalization has also compelled key market players to include global delivery systems in their business strategies.

Markets are witnessing a shift in the engineering service needs from core competencies in niche markets to non-core and mechanical requirements. The OEMs are establishing ESPs as key players in their supply chains due to the changing approach to product lifecycle development. As ESO delivery evolves, ESPs are developing service delivery models that integrate a wider engagement portfolio and an authorization framework. This facilitates innovation and accelerates bottom-line as well as top-line growth.

Industry 4.0's implementation is driving smart production and encouraging the demand for industrial solutions based AI, robotics, and machine learning. This opens up opportunities for IT integration into the service offerings of ESPs. Providers of digital transformation services are looking for potential clients in end-use industries and verticals, such as aerospace and automotive. ESPs will see huge opportunities due to the growing demand for automation in open system architecture. However, it may prove difficult for new entrants to establish a foothold on the market due to a lack of project experience, technology expertise and business operations.

But digitization can also lead to cybersecurity problems. Many end-user industries and verticals have their own data and exchange large amounts of information with each other, including data about monitoring, load management and quality assurance. Service providers, OEMs, suppliers, and consumers often share confidential information about technology, performance, specifications, and equipment in order to improve collaboration on design, support, development, or other projects. Manufacturers are taking preventive measures to safeguard the Intellectual Property (IP), such as monitoring the network, protecting critical information with access codes and keeping the original design or source code.

The ESO market's impact on the COVID-19 pandemic, and subsequent lockdowns in different countries around the globe, varied depending on end-use industries and verticals. In an effort to stop the spread of the disease, industrial facilities, manufacturing plants and public transport were temporarily shut down. In the end, incumbents in industries and verticals such as construction and automotive had to face a drop in demand. The COVID-19 pandemic has caused people to prefer private transport and will likely increase sales of personal cars.

Service Insights

In 2020, the testing segment was responsible for more than 30.0% of the total market revenue. It is expected to continue its dominance over the forecast period. Over the last years, the testing segment has seen a significant increase in its popularity. This is due to the need to create and redesign products with better compatibility and bug-free operation. For bug-free and user-friendly software, OEMs are increasingly hiring software testing services from ESPs. The segment is expected to grow due to increasing demand for testing outsourcing services that reduce manual intervention and speed up turnaround times.

Designing is expected to experience significant growth with a CAGR of approximately 25.0% during the forecast period. This is due to the increasing complexity of designing and the need for lower costs to outsource design to skilled, but low-cost workers. Over the forecast period, the rising popularity of design engineering for next-generation mobility equipment and solutions is expected to drive the demand. This segment is expected to grow due to the rising demand for consumer-centric products.

Location Insights

In 2020, the onshore segment was responsible for 55.0% of the total revenue and will continue to dominate the market during the forecast period. Onshore services are services that are delivered to the OEM in the country of the ESP. Onshore outsourcing is a way for OEMs to bypass time zones and political and geopolitical obstacles. Language barriers can be eliminated by offshore outsourcing, and communication between service providers and OEMs is improved. This helps to improve the delivery of products or services.

Cross-border delivery of engineering services is possible with offshore services. Due to global inflation rates and high churn rates as well as rising preference for offshore partners, the offshore segment will see slower growth than the onshore segment. ESPs must also adhere to the various regulations in outsourcing contracts when serving clients in different countries. The modest growth in the offshore market can be attributed primarily to the availability and ease of access to skilled talent from countries such as India, China and Malaysia.

Application Insights

In 2020, the industrial segment was responsible for 60.0% or more of the total market's revenue. It is expected to continue its dominance over the forecast period. Digitization is being used in many exploration services such as drilling, blasting and crushing. Cloud infrastructure is being adopted by industrial goods manufacturing companies to modernize their IT infrastructure, drive automated processes, and streamline existing processes. The industrial sector is expected to grow through the implementation of the Industrial Internet of Things (IIoT), which reduces downtimes, detects and prevents faults and lowers maintenance costs.

From 2021 to 2028, the healthcare sector is expected to experience the highest CAGR at 30.0%. This growth is due to aggressive investments in medical equipment, labs, and medications. The ESPs saw an increase in sales because they are highly favored by healthcare companies, particularly in recent months, to develop vaccines and drugs that eliminate the harmful effects from coronavirus. In order to improve clinical proficiency and reduce operational costs, healthcare companies are increasingly collaborating in this area with the ESPs. Many healthcare organizations have formed strategic alliances with ESPs in order to increase their market presence and improve the client-contractor relationship. PRA Health Sciences' Symphony Health data solutions division, which includes sales audits and prescriptions, formed an alliance with Close-Up International in August 2020.

Regional Insights

Asia Pacific was the dominant market for engineering services outsourcing in 2020 with a revenue share around 40.0%. This region is expected to see significant growth during the forecast period. Asia Pacific is a major hub for industrial goods production and the provision of cost-effective services by highly skilled engineers. It is also home to many prominent outsourcing service providers. Asia Pacific's growing demand for technological innovation, and continued integration of embedded code into existing models, will drive growth.

The forecast shows that South America will experience significant growth in the coming years. Many key market players have begun to establish themselves in South America as a preferred location for offshore outsourcing. Stable wage inflation is another important factor in the expansion of the South America market. This is in contrast to other offshore locations. The paperwork involved in outsourcing activities in the region is very detailed. This makes it a profitable market for both sides.

Market Share Insights and Key Companies

Altran, Tata Consultancy Services Limited, Infosys Limited, and Tata Consultancy Services Limited are key market players. Industry leaders have been actively developing solutions to help manufacturers implement state-of the-art technologies in engineering projects. Manufacturers are under increasing pressure to deliver on time and accurately due to changing consumer preferences. This has made it imperative that they include outsourcing into their operations. As part of their efforts to build customer loyalty and sustain long-term partnerships, ESPs must be able to meet the needs of clients.

Partnering with OEMs and suppliers helps to coordinate business activities and reduce costs. It also streamlines work processes and encourages diversification. CTP SYSTEM SRL in Italy and Edelway from Switzerland were acquired by Akka in July 2017. These two engineering firms are experts in the pharmaceutical and life sciences industries. The acquisitions have strengthened Akka's position as an engineering affiliate in healthcare. ESO vendors with a strong reputation are now expanding their services to full-time consulting. This allows them to establish strategic relationships with end-users and help them improve their operational performance. The following are some of the most prominent players in the engineering outsourcing market:

• Infosys Limited

• Tata Consultancy Services Limited

• ALTEN Group

• Altair Engineering, Inc.

• Boston Engineering Corporation

• Altran

Up Market Research published a new report titled “Engineering Services Outsourcing Market research report which is segmented by Service (Testing, System Integration, Designing, Prototyping), By Players/Companies Boston Engineering Corporation, Altran, ALTEN Group, Altair Engineering Inc, Infosys Limited, Tata Consultancy Services Limited”. As per the study the market is expected to grow at a CAGR of XX% in the forecast period.

Report Scope

The report covers comprehensive data on emerging trends, market drivers, growth opportunities, and restraints that can change the market dynamics of the industry. It provides an in-depth analysis of the market segments which include products, applications, and competitor analysis.

Global Engineering Services Outsourcing Market Report Segments:

The market is segmented by Service (Testing, System Integration, Designing, Prototyping).

Engineering Services Outsourcing Market research report delivers a close watch on leading competitors with strategic analysis, micro and macro market trend and scenarios, pricing analysis and a holistic overview of the market situations in the forecast period. It is a professional and a detailed report focusing on primary and secondary drivers, market share, leading segments and geographical analysis. Further, key players, major collaborations, merger & acquisitions along with trending innovation and business policies are reviewed in the report.

Key Benefits for Industry Participants & Stakeholders:

• Industry drivers, restraints, and opportunities covered in the study
• Neutral perspective on the market performance
• Recent industry trends and developments
• Competitive landscape & strategies of key players
• Potential & niche segments and regions exhibiting promising growth covered
• Historical, current, and projected market size, in terms of value
• In-depth analysis of the Engineering Services Outsourcing Market

Overview of the regional outlook of the Engineering Services Outsourcing Market:

Based on region, the market is segmented into North America, Europe, Asia Pacific, Latin America and Middle East & Africa (MEA). North America region is further bifurcated into countries such as U.S., and Canada. The Europe region is further categorized into U.K., France, Germany, Italy, Spain, Russia, and Rest of Europe. Asia Pacific is further segmented into China, Japan, South Korea, India, Australia, South East Asia, and Rest of Asia Pacific. Latin America region is further segmented into Brazil, Mexico, and Rest of Latin America, and the MEA region is further divided into GCC, Turkey, South Africa, and Rest of MEA.

Highlights of The Engineering Services Outsourcing Market Report:

1. The market structure and projections for the coming years.
2. Drivers, restraints, opportunities, and current trends of Engineering Services Outsourcing Market.
3. Historical data and forecast.
4. Estimations for the forecast period 2028.
5. Developments and trends in the market.

                1. Testing

                2. System Integration

                3. Designing

                4. Prototyping

7. Market scenario by region, sub-region, and country.
8. Market share of the market players, company profiles, product specifications, SWOT analysis, and competitive landscape.
9. Analysis regarding upstream raw materials, downstream demand, and current market dynamics.
10. Government Policies, Macro & Micro economic factors are also included in the report.

We have studied the Engineering Services Outsourcing Market in 360 degrees via. both primary & secondary research methodologies. This helped us in building an understanding of the current market dynamics, supply-demand gap, pricing trends, product preferences, consumer patterns & so on. The findings were further validated through primary research with industry experts & opinion leaders across countries. The data is further compiled & validated through various market estimation & data validation methodologies. Further, we also have our in-house data forecasting model to predict market growth up to 2028.

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Reasons to Purchase the Engineering Services Outsourcing Market Report:

• The report includes a plethora of information such as market dynamics scenario and opportunities during the forecast period
• Segments and sub-segments include quantitative, qualitative, value (USD Million,) and volume (Units Million) data.
• Regional, sub-regional, and country level data includes the demand and supply forces along with their influence on the market.
• The competitive landscape comprises share of key players, new developments, and strategies in the last three years.
• Comprehensive companies offering products, relevant financial information, recent developments, SWOT analysis, and strategies by these players.