The global engineering services outsourcing market size was estimated at US$ 1.5 trillion in 2021 and it is expected to hit around US$ 6.6 trillion by 2030 with a registered CAGR of 33.2% from 2022 to 2030.
The engineering services outsourcing is the practice of hiring nonphysical engineering functions from a third party, such as prototyping, design, and testing. These services are required at the beginning of the product development and design process and make use of variety of information technology-based databases and tools. The engineering services outsourcing is used in the communications and networks industries to hire network design services, inventory management, and geographic data analytics. Aside from that, it has a wide range of applications in device remote monitoring, industrial automation, product cycle management, and supply chain management.
Outsourced engineering entails delegating specific engineering operations and duties to a team or individuals operating outside the organization. Many organizations see outsourcing to be a sensible way to gain access to low-cost offshore market.
One of the most widely outsourced design services is new product development, sometimes known as research and development. The companies that use expert engineering support for product development and design can bring their products to market considerably faster. Bringing idea to a group of highly skilled engineers and allowing them to turn it into useful end products is what research and development is all about. The research and development process is also outsourced by many market players.
Report Scope of the Engineering Services Outsourcing Market
|Market Size by 2030||USD 6.6 Trillion|
|Growth Rate from 2022 to 2030||
CAGR of 33.2%
|Asia Pacific Market Share in 2021||41%|
|Industrial Segment Market Share in 2021||61%|
|Forecast Period||2022 to 2030|
|Segments Covered||Service, Application, Location, Geography|
|Companies Mentioned||Cybage Software Pvt. Ltd, Sonata Software Limited, Tata Consultancy Services Limited, Tech Mahindra Limited, Altair Engineering Inc., Wipro Limited, HCL Technologies Limited, QuEST Global Services Ltd, EPAM Systems Inc., Accenture Plc.|
The cost reduction from lower labor wages will be a major driver for the growth of engineering services outsourcing market. Due to high cost of labor in developed and industrialized countries, companies are outsourcing their engineering processes to less expensive locations. The engineering services outsourcing allows businesses to delegate work to low-cost workforce while reducing costs associated with extra office space, labor, infrastructure, and operations. These benefits are predicted to drive engineering services outsourcing from high-cost labor countries to low-cost labor countries.
The rise of the engineering services outsourcing business, as well as the increasing usage of engineering service outsourcing, is mostly attributable to shorter product life cycles. Most business solutions are only available for a limited time, requiring resubscription or repurchase. A consumer may need to upgrade and modify their information technology infrastructure system after the contract expires, or an automobile original equipment manufacturer may require a new set of engines for an upcoming vehicle, necessitating ongoing technical upgrades.
The engineering services outsourcing company thrives as a result of the repeating nature of the services, which also increases demand for subsequent goods, moving the sector forward. When selecting an engineering service outsourcing provider, industry experience, previous initiatives, market value, and the quality of service it provides are all important aspects to consider. However, new entrants may find it difficult to break into the engineering services outsourcing market and establish a presence due to a lack of project infrastructure, business networks, and familiarity with client requirements.
One of the primary factors driving the engineering services outsourcing market’s growth is the increased adoption of integrated solutions for creating and evaluating engineering systems. Additionally, growing use of engineering systems such as computer aided engineering, electronic design automation software, computer aided manufacturing, and computer aided design software is fueling the engineering services outsourcing market expansion. These applications help to improve the overall efficiency of manufacturing operations and can be used on laptops, tablets, smartphones, and computers.
Other growth inducing variables include various technical developments and the introduction of digital transformational services. The original equipment manufacturers are integrating smart manufacturing systems, artificial intelligence, robotics solutions to better product detailing and modelling which is also boosting the engineering services outsourcing market.
In 2021, the testing segment accounted revenue share of around 31%. The necessity to build and modify product models with improved compatibility and bug free operations has fueled the testing segment’s growth in recent years.
The designing segment is predicted to develop at the CAGR 26% in the future years. This is attributed to increasing design complexity and the need to save costs by outsourcing design to a trained but relatively low-cost workforce.
In 2021, the onshore segment dominated the market with revenue share of 56%. The onshore services refer to the provision of services to an original equipment manufacturer based in the same nation as the engineering services providers. The onshore outsourcing removes language barriers and improves communication between service providers and original equipment manufacturers, resulting in better service and product delivery.
The offshore segment, on the other hand, is predicted to develop at the quickest rate in the future years. The offshore services refer to the delivery of engineering services beyond international borders. Due to the worldwide inflation rates, training expenses, high churn rates, and an increasing preference for outsourcing to onshore partners, the offshore segment is expected to develop at a rapid pace.
The industrial segment has garnered revenue share 61% in 2021. Through the adoption of private, public, and hybrid clouds, industrial products manufacturing businesses are modernizing their information technology infrastructure, driving automation, and streamlining obsolete processes.
The healthcare segment is expected to witness growth at a CAGR of around 31% over the forecast period. The extensive investments in laboratories, medical equipment, and drugs have contributed to the segment’s growth.
North America is expected to develop at the fastest rate during the forecast period. The North America regional market is predicted to grow in response to the growing need for technological innovation and the continued integration of embedded software into existing models.
Asia-Pacific accounted 41% revenue share in the year 2021. The Asia-Pacific region is a center place for industrial products development as well as acquiring cost effective engineering services offered by highly skilled professionals and engineers. The region is also home to a number of well-known software outsourcing service firms.
The mergers and acquisitions, partnerships, new product development, business expansions, collaborations, supply contracts, agreements, and contracts are some of the important marketing strategies used by the major market players to maintain their market position. These market players act as third-party firms for the organizations who outsource business processes from them.
Some of the prominent players in the global engineering services outsourcing market include:
Segments Covered in the Report
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