Engineering Services Outsourcing Market To Reach USD 1200 billion by 2027 Growing at a CAGR of 30%
INTRODUCTION: Engineering Services Outsourcing Market
The Global Engineering Services Outsourcing Market is experiencing stable growth due to the surge in demand for its available product range. This demand is sourced in the (end-user industries), many of which are working on developing innovative solutions for the future. The Engineering Services Outsourcing market has undergone a gradual integration in the leading business sectors, primarily due to the technological development observed in the industry. Our team of expert analysts has devised this market report by reviewing information collected through both primary and secondary research methodologies.
In this report, the global Engineering Services Outsourcing market is valued at USD 430 billion in 2020 and is expected to cross the valuation of USD 1200 billion by the end of 2027, growing at a CAGR of around 30% between 2019 and 2027.
Engineering services outsourcing (ESO) can be defined as services required at every stage of product lifecycle from conceptualization to retirement. Since beginning, product design and development which are core to any engineering function has leveraged Information Technology through tools, databases and automation of processes.
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Recently, for the designing of new products engineers are incorporating Information Technology more firmly so that not only does technology enables it but also envelopes it. Today manufacturers are providing appliances-as-a-service rather than providing appliances. Engineering services outsourcing providers have integrated engineering with Information Technology to create smart machines which comes with built in IT which enables it to connect to a smart platform which helps in predicting, preventing and scheduling maintenance.
Currently, evolution of the Engineering services outsourcing is in the second wave which is driven by advancement in technology and business and consumer expectations which is helping it push forward and making it poised for exponential enterprise growth.
The Three Waves of the Engineering Services Industry:
Wave 1 [2000–2010]: Use of embedded software in the product and product ecosystem
Example:
1. Healthcare — medical devices and implants
2. Consumer electronics — embedded intelligence
3. Aerospace — advanced navigation and infotainment
4. Auto manufacturing — telematics and infotainment
Wave 2 [2010–2017]: Internet of Things, machine-to-machine (M2M) adoption and digital transformation; IT envelopes the product
Example:
1. Smart homes — connected home appliances
2. Healthcare — remote and continuous monitoring
3. Oil and gas — engineering information management
4. Auto — Vehicle to vehicle (V2V), vehicle to infrastructure, (V2I), driver assistance
Wave 3 [2015 Onwards]: Manufacturing integrates with engineering and IT systems; 3-D or additive printing (IoT evolution)
Example:
1. Auto — Smart manufacturing
2. Oil and gas — digital oil fields with integrated, optimized asset utilization
3. Cross-industry — manufacturing execution systems/product lifecycle/enterprise resource planning integration to leverage social media, analytics and big data to drive product usage and design
4. Cross-industry — 3D and additive printing applications
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Engineering services outsourcing Lanscape:
Technology landscape is rapidly transforming due to the extensive utilization of Internet of Things (IoT). IoT capabilities like sensor technology, wireless communications, distributed computing and big-data capabilities is helping in advancement of Engineering services outsourcing (ESO). Intelligence to products are being added with the help of embedded electronics which require them to connect to databases and connected platforms. There is requirement of a direct interface between IT and engineering so as to enable internet connection in products and services. Thus It enabled products are interconnecting with manufacturing constructs like 3D Printing.
ESO providers are creating intelligent applications so as to customize and monitor the whole product experience in different industries.
Software has become the epicenter for the growth across all industries so as to improve the usability of products and services which is key for acquisition, retention and satisfaction of end users. Engineers and designers are capturing their own data by creating products which enables future product development and reduced development cycles by establishing a continuous feedback loop. This enables engineers and designers to make their products more intelligent and deliver their products as a service and by integrating software application they are enhancing customer experience.
By industry application, automotive sector is the front runner with share of around 26%, reason being automotive OEMs are compelled by the constant requirement for reliability, fuel economy, safety and superior performance. After automotive industry, consumer electronics and telecommunication hold the second largest share in Engineering services outsourcing (ESO) due to the fact that they require shorter product lifecycles and constant technological innovations.
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How IoT is Applied across Industries
Automotive — Connected car, advanced driver assistance, Vehicle-to-Vehicle (V2V) and Vehicle-to-Infrastructure (V2I) communication
Energy/Utility — Smart grid, smart buildings/energy consumption, proactive maintenance of critical and expensive production equipment
Healthcare — Remote monitoring, real-time and continuous clinical care, wearable devices, early intervention
Consumer Electronics — Smart homes/home automation, intelligent devices like washing, machines and refrigerators enabling energy management, remote access and security
Geographic Scenorio:
By geography, US dominates with two-third of the global Engineering Research & Development(ER&D) Spend followed by japan with 27% which makes japan the second highest spender in the Engineering services outsourcing (ESO) industry. Europe is the third highest spender in which Germany is the largest spender followed by Netherlands, Italy, Sweden, United Kingdom and France.
Enterprise outsourced R&D market was estimated to be around USD 75 Billion in 2013–14, with US, Japan and Germany constituting top three top countries. Engineering Services Outsourcing industry for India was estimated to be around 16–17% but it is expected that India will hold around 35–40% share in the global market by 2020 as it competes with countries like Germany, US, France for onshore delivery and for offshore delivery it is competing with countries like China, Eastern Europe, Mexico, Vietnam and Philippines.
Evolution of Engineering services outsourcing (ESO) Industry:
At the start, Original Equipment Manufacturers (OEMs) and Independent Software Vendors (ISVs) used Engineering Service Providers (ESPs) for tactical engineering support. But as the requirement for reduced time to market and scale-up was required by customers ESPs came to fulfill this requirement, ESPs helped accelerate product development process and operational expenditure. Currently businesses require constant cost reduction and shorter product lifecycles which has seen increased focused on developing effective outsourcing strategies which has led to substantial growth in engineering services outsourcing market. ESO Market has evolved to encompass a variety of new product development and product support functions and the future growth will depend on how well Engineering services outsourcing market will be able to drive new product innovations for its users.
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Perceived Barriers of Engineering services outsourcing (ESO) Industry:
1. Fear of lack of control over product development
2. Resistance from internal product development teams
3. Resistance from finance department to invest in additional outsourcing infrastructure
4. Products that are created by third party vendors will not adhere to quality standards
5. Geo-political reasons
6. Fear of employee relocation issues
Which engineering functions can be outsourced?
In product development lifecycle activities like software development, testing, manufacturing supports are the likely candidates for outsourcing as the complexity of these tasks are not that complex. In technology development field, activities like change management, research and analysis, tool selection are possible outsourcing candidates. Activities like technological planning, strategic planning, and architecture design falls in the category of core activities.
Strategic ESO Engagement:
On the basis of product portfolio of a customer and the stage at which they lie in the product development lifecycle, ESPs can create specific propositions as detailed below
1. End of Lifecycle Support
2. Industrialized Engineering
3. Supplier Sourced Innovation
4. Platform & Ecosystem Engineering
LEADING PLAYERS
The report gives an in-depth assessment of the top companies functioning in the global sector and controlling a sizable portion of the overall market. This section also breaks down the expansion tactics adopted by these companies, along with a detailed assessment of their strategic initiatives by highlighting recent deals, mergers & acquisitions, joint ventures, collaborations, product launches, and technological upgradation. The report creates elaborate company profiles of all leading companies to provide the readers with all relevant data on the competitive landscape, enabling them to capitalize on existing and emerging growth prospects by taking well-informed decisions.
The major players covered in this report are:
Altran Technologies S.A.
Alten GmbH
AKKA Technologies
L&T Technology Services
IBM
Bertrandt
Globant
SII Group
GlobalLogic
Infosys Ltd.
HCL Technologies Limited
Mindtree
Tata Consultancy Services Limited
Tech Mahindra Limited
Infosys Limited
Wipro Limited
IAV Gmbh
P+Z Engineering GmbH
Kristler Instruments AG
Accenture
Aricent Group
RLE International Group
Mindfire Solutions
Sonata Software Limited
EPAM Systems Inc
KPIT Technologies Ltd
QuEST Global
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MARKET SEGMENTATION
On the basis of Service Type, this report displays the production, revenue, price, market share and growth rate of each type, primarily split into:
Designing
Prototyping
System Integration
Testing
Others
On the basis of Location Type, this report displays the production, revenue, price, market share and growth rate of each type, primarily split into:
Onshore
Offshore
On the basis of Application, this report displays the production, revenue, price, market share and growth rate of each type, primarily split into:
Automotive
Consumer Electronics
Telecom
Heavy Machinery
Semiconductor
Computing Systems
Aerospace
Energy
Medical Devices
Healthcare
Industrial Automation
Automated Embedded Engineering Services
Construction
Others
REGIONAL FRAMEWORK
A study of the leading regional markets is crucial for assessing the global presence of the Engineering Services Outsourcing industry. The regions included in the report are further analyzed by looking at the presence of Engineering Services Outsourcing in major countries in these regions. The regions included in the geographical coverage are North America, Europe, Asia Pacific, Latin America, and the Middle East & Africa. The leading countries in these regions are also considered to establish their standing and contribution to the overall market share. The North America region is set to deliver a steady growth rate in the forecast years owing to the surge in demand seen from the local consumer base.
Geographically, this report studies the key regions, focuses on product sales, value, market share and growth opportunity in these regions, covering:
o United States
o Europe
o China
o Japan
o Southeast Asia
o India
We can also provide the customized separate regional or country-level reports, for the following regions:
North America, United States, Canada, Mexico, Asia-Pacific, China, India, Japan, South Korea, Australia, Indonesia, Singapore, Rest of Asia-Pacific, Europe, Germany, France, UK, Italy, Spain, Russia, Rest of Europe, Central & South America, Brazil, Argentina, Rest of South America, Middle East & Africa, Saudi Arabia, Turkey, Rest of Middle East & Africa
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Key coverage of the report
o Regional demand estimation and forecast
o Pre-commodity pricing volatility
o Technological updates analysis
o Location Quotients Analysis
o Raw Material Sourcing Strategy
o Competitive Analysis
o Product Mix Matrix
o Vendor Management
o Cost Benefit Analysis
o Supply chain optimization analysis
o Patent Analysis
o Carbon Footprint Analysis
o R & D Analysis
o Mergers and Acquisitions
