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Industry Insights, Market Size, CAGR, High-Level Analysis: Global Engineering Services Outsourcing Market The global engineering services outsourcing market size was estimated at USD 316.78 billion in 2019 and anticipated to witness a CAGR of 29.2% over the forecast period. Increased tie-ups between automotive Original Equipment Manufacturers (OEMs) and engineering services outsourcing (ESO) providers is the key factor driving the market. Various benefits of outsourced engineering services, such as the globalization of R&D and engineering by major industrial groups, avalanche of technological disruptions, talent scarcity, lower incurred costs, and growth in high technology-enabled industries especially in the developed economies, are anticipated to significantly contribute to the ESO market growth. The market evolved abruptly over the last two decades, from offering engineering services through its headquarters to now launching centers of excellence and key operations in developing countries. Globalization has compelled the key participants to include global delivery systems in their business strategies. The industry, which traditionally catered the OEMs with core engineering services across the entire product lifecycle, now emphasizes on serving the end-customers with offerings integrated with digital technologies, such as internet of things (IoT), analytics, cloud, and automation. Furthermore, the engineering service providers (ESPs) are continually upgrading their digital capabilities so as to cope up with the continuously changing consumer demands. The end-use industries witnessed a drastic shift, where earlier the products were largely designed for mass consumption, to now being consumer-driven and customized based on the user’s needs and traits. OEMs procure engineering services that are beyond their core competencies to ensure delivering technologically upgraded customized products to their consumers. OEMs emphasize on certain factors, including the quality of service, domain expertise, market value, and previous projects, while selecting an ESP. New entrants may find it difficult to enter the market and establish their presence owing to the lack of business network, project expertise, and familiarity with client requirements.The fourth industrial revolution is primarily characterized by the advancements in services, including smart manufacturing, robotics, artificial intelligence (AI), and automation are positively impacting the market. Industries, including the manufacturing and automotive sector, incorporating digital transformational services have emerged to be the essential buyers of the upgraded capabilities of engineering offerings globally. ESPs are subjected to gain more opportunities with the consistent integration of automation components in the open system architectures that will help in offering invariable data management, uniform software and hardware interfaces, and match global standards. However, Intellectual Property (IP) confidentiality and security threats are two critical factors restraining the growth of the Engineering Services Outsourcing (ESO) market. The end-use industry participants transfer large volumes of data, which comprise data monitoring, quality assurance, and load management between OEMs, service providers, and consumers. The OEMs, suppliers, and service providers routinely exchange confidential data on technology, specifications, and performance of equipment to enhance collaboration on design, development and support. OEMs who wish to outsource from specialized ESO firms ought to undertake several measures, such as examining the functioning of networks, protecting critical data with access codes, maintaining an original copy of the source code or design of the IP. Service Insights of Global Engineering Services Outsourcing Market The engineering services outsourcing market is segregated by services into designing, prototyping, system integration, testing, and others. The testing segment accounted for the highest revenue share in 2019 and is expected to continue dominating the market throughout the forecast period. The OEMs outsource software testing component from ESPs with highly skilled IT professionals to install bug-free and efficient software in their systems. Furthermore, the growing demand for procuring software solutions to reduce turnaround time and manual intervention significantly contribute to the revenue share of the testing segment. The designing segment is expected to witness a significant CAGR of 31.3% over the next seven years. The growing popularity of visual design, graphic design, architectural design, and industrial design has led to the deployment of design tools, including CAD, CAE, and CAM tools. Furthermore, the growing demand for consumer-driven products is anticipated to contribute to the growth of designing services over the forecast period. The others segment accounting the market size of maintenance, repair, and support services is also projected to witness significant growth from 2020 to 2027. This growth can be attributed to the rising concern pertaining to operating efficiency of engines and machines, especially in the automotive, aerospace, and industrial verticals that involve the integration of heavy machinery. Also, multiple benefits of maintenance and repair assistance by ESPs, such as longer equipment lifecycles, lower incurred costs, reduced operating expenditure (OpEx) and capital expenditures (CapEx), is expected to drive the segment growth. Location Insights The onshore segment accounted for a considerable revenue share in 2019 and is expected to continue dominating over the forecast period. Onshore services refer to the offerings to the OEMs from the ESO vendor operating in its home country. OEMs prefer outsourcing onshore services owing to the lower costs incurred as well as various concerns regarding the information security and privacy of their data involved in the procurement. The onshore ESO activities are gaining prominence as similar time zones and communal customs aid in a better understanding between the OEM and service providers, yielding a better quality of product or service. Offshore engineering services refer to the procurement of offerings from ESPs based in international locations. The offshore segment is forecasted to witness a significant CAGR of over 26% from 2020 to 2027, attributed to the availability of relatively highly skilled and less expensive workforce in countries, such as Romania, Russia, Philippines, India, Malaysia, and Brazil, which make them the most sought-after outsourcing destinations. However, ESPs have to comply with outsourcing regulations and laws imposed by different geographic regions while fulfilling outsourcing contracts. The regulations govern different elements on the basis of preferred structure, outsourcing scope, political scenario, and various industries’ landscape in the country. Furthermore, individual regulatory bodies impose restrictions for outsourcing specific functions, making it difficult for the ESPs to offshore to OEMs based in foreign countries. Application Insights of Global Engineering Services Outsourcing Market The construction segment is anticipated to grow at a significant pace over the forecast period. The proliferation of digital transformation technologies for the growth initiatives of smart city projects worldwide are expected to contribute to the growth of construction engineering services. Furthermore, the upsurge of intelligent buildings powered by AI that are able to self-optimize operations and building management systems are anticipated to drive the segment growth. The automotive segment accounted for the highest revenue share in 2019 and is forecasted to reach over USD 450 billion by 2027. The automotive manufacturers are facing increasing demand for capacity and skills due to present-day technological complexities. Powertrain electrification technology, connected cars technology, development of vehicles with piloted or autonomous driving system, and the use of lightweight materials for vehicle production and assembly are the most recent technologies which require proficient engineering solutions. The automobile companies need to develop pre-defined strategies for outsourcing solutions for such core competencies. The aerospace segment has been witnessing a moderate growth trajectory across major developing countries owing to the increasing number of operational aircraft due with newer, technologically advanced and fuel-efficient parts is likely to upsurge in the coming decade. The developing ecological concerns, which are resulting in new environmental norms and safety protocols, are upholding the OEMs to modify or completely change the aircraft components or aero structure. Regional Insights of Global Engineering Services Outsourcing Market Asia Pacific held a dominant position in 2019 and is expected to retain the same over the forecast period. Countries, such as China and India, have emerged as low-cost locations offering technologically upgraded services with the help of highly skilled professionals. As these countries are major hubs of prominent manufacturing, automotive, and construction OEMs, the region is expected to continue dominating the ESO market throughout the forecast period. Latin America is poised to register a significant CAGR of over 30% during the next seven years. Infrastructure development emerged as a key driving factor for engineering services outsourced in the region. With the immense potential in the lucrative industries, the key global companies are expanding their operations in Latin America. The ability of the regional ESO players to offer skill-intense and more knowledge-driven service offerings within the country is anticipated to drive the regional market growth. North America is anticipated to witness a substantial growth over the forecast period. U.S. is a major automotive, aerospace, and construction hub for OEMs, thereby is a major contributor to the regional market growth. The Eastern European countries, including Romania, Poland, Ukraine, Czech Republic, and Russia, are increasingly emerging as lucrative software development outsourcing destinations worldwide. Engineering Services Outsourcing Market Share Insights The key players operating in the ESO market include Altran Technologies S.A., Alten GmbH, Infosys Ltd., HCL Technologies Limited, Tata Consultancy Services Limited, Tech Mahindra Limited, Infosys Limited, and Wipro Limited. The companies are engage in tie-ups and collaborations with key OEMs from different verticals to offer state-of-the-art-solutions within the client budgets. For instance, In December 2018, Altran announced its collaboration with Wirepas for expansion of its range of localization solutions intending to help the former to reduce the wastage of inventories and money, along with increasing safety and security of workers by leveraging Wirepas’s location-based service solutions. Also, In November 2017, Bertrandt collaborated with SGL and developed an integrated concept for innovative interior structures based on composite materials-the Carbon Carrier-which combines lightweight fiber compounds and built-in functionality. The carbon carrier is used for material mix in the automotive industry. p2 Segments Covered in this Report This report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2020 to 2027. For the purpose of this study, this market research report has segmented the global engineering services outsourcing market report based on services, location, application, and region: Services Outlook (Revenue, USD Billion, 2019 - 2030) Designing Prototyping System Integration Testing Others Location Outlook (Revenue, USD Billion, 2019 - 2030) Onshore Offshore Application Outlook (Revenue, USD Billion, 2019 - 2030) Aerospace Automotive Construction Consumer Electronics Semiconductors Pharmaceuticals Telecom Others
Table of Contents Chapter 1 Methodology and Scope 1.1 Market Segmentation & Scope 1.2 Market Definitions 1.3 Information Procurement 1.3.1 Purchased Database 1.3.2 Gvr’s Internal Database 1.3.3 Secondary Sources & Third Party Perspective 1.3.4 Primary Research 1.4 Information Analysis 1.4.1 Data Analysis Models 1.5 Market Formulation and Data Visualization 1.6 Data Validation and | read more...