Engineering Services Outsourcing Market Size & Share Analysis - Growth Trends & Forecasts (2023 - 2028)

Engineering Services Outsourcing Market Size & Share Analysis - Growth Trends & Forecasts (2023 - 2028)

The global engineering services outsourcing market is expected to grow at a compound annual growth rate (CAGR) of 15% during the forecast period. The globalization of R&D activities, the rising demand for integrating the latest technologies in the product offerings, and the growing need to shorten the product lifecycles and cut costs are expected to contribute to the growth of the market.

The impact of the outbreak of the COVID-19 pandemic and the subsequent lockdowns in various countries across the world varied depending on the end-use industries and industry verticals. Industrial facilities, manufacturing plants, and public transport were shut down temporarily as part of the efforts to arrest the spread of the disease. The market is driven by the cost savings from lower labor wages and reduced time to market and improved access to emerging markets. Product design and development, which are at the core of engineering function, have long leveraged information technology (IT) through tools and databases and through the automation of certain processes. Engineering software such as computer-aided designing (CAD) software, computer-aided engineering (CAE) software, computer-aided manufacturing (CAM) software, electronic design automation (EDA) software, and architecture, engineering, and construction (AEC) software are highly adopted by industries across the region.

Engineering services evolved into an outsourcing model that enhanced the efficiency of a firm, improved processes and cost effectiveness, and lowered time to develop a product. Many companies have begun offshoring to cut costs and have also expanded their commitments for more strategic reasons. Risk of losing control over turnaround time and quality of the finished product are likely to negatively impact the growth of the engineering services outsourcing market. Furthermore, geo-political barriers such as cultural barriers, distance, time difference, and political instability are other factors may hamper growth of the target market to a certain extent.

Engineering Services Outsourcing Market Trends

Rising adoption of integrated solutions driving the growth of the market

Increasing industrial automation, along with the rising adoption of integrated solutions for analyzing and designing engineering systems, represents one of the key factors driving the growth of the market. Furthermore, widespread utilization of engineering systems, such as computer-aided design (CAD), computer-aided engineering (CAE), computer-aided manufacturing (CAM), and electronic design automation (EDA) software, is also driving the market growth. This software aid in enhancing the overall efficiencies of the production processes and can be operated by the user over smartphones, laptops, and tablets.

Various technological advancements and the incorporation of digital transformational services are acting as other growth-inducing factors. Other factors, including the increasing utilization of strategic outsourcing services by the automotive, marine, and offshore sectors, along with the development of 3D printing solutions, are expected to drive the market further. There is a rise in preference for the outsourcing of engineering services among small and medium-size engineering service providers, these services include, new product induction from conceptual design to final product development and validation, process engineering, automation, enterprise asset management, and overall business process enhancement. This attributes to witness lucrative growth of the global engineering services outsourcing market.

Rise in Engineering Outsourcing Services

The market is driven by the cost savings from lower labor wages and reduced time to market and improved access to emerging markets. In addition, cost savings from lower labor wages are anticipated to boost the growth of the market as well. The increasing need to reduce overall operational cost expenditure among various industries is a major factor supporting the growth of the global Engineering Services Outsourcing market. Engineering outsourcing help to reduce time to market and helps project execution this supports manufacturers to gain high profit and accelerate their product development process. In addition, the rising need for capacity augmentation in various industries is expected to support the growth of the market during the forecast period.

The Engineering Services Outsourcing (ESO) market has witnessed substantial growth in recent decades and has evolved to encompass a broad range of new product development, value-engineering, and engineering consulting functions. At a global level, ESO spending is shifting proportionally from mature to emerging markets, primarily to India. Captive operations have also grown significantly in India and China. Both trends reflect underlying dynamics of the global sourcing market.

Engineering Services Outsourcing Industry Overview

Global Engineering Services Outsourcing Market is fragmented and competitive. A significant trend of mergers and alliances of various global engineering firms has been seen over the past decade to increase foothold in the market. Partnerships with start-up companies including manufacturing start-ups and other industry ecosystem players are expected to provide new opportunities for the growth of the Engineering Services Outsourcing Market. Companies are extensively investing in R&D operations and are focusing on providing customized services to their customers.

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