Engineering Services Outsourcing Market - Overview

Over the years, in a product-centric world, R&D has always been perceived as intellectual property, and hence, is treated with utmost confidentiality. There was no room for collaborative or complementary R&D. However, after a certain period of evolution, there was a shift away from products alone to an ecosystem of services around the product, focusing on end-user experience. Also, there emerged a need for the development of the product, associated platforms, and industry- and geospecific variants for companies to go to market. Companies are engaged in developing or enhancing services in order to serve customers across various industries such as construction, manufacturing, etc. better. The engineering services industry has been flourishing across regions. Engineering services include services that are required at each stage of the product lifecycle, from conceptualization to retirement. 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 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. The automotive sector, for example, offshores engineering. While some companies such as GM use offshoring primarily as a tactical tool to help cut costs, others such as Toyota see the offshoring of product development in more strategic terms: as a way to help open up new markets and boost overall productivity and quality. This more strategic view will become increasingly prevalent over time.

Engineering Services Outsourcing Market - Drivers and Restraints

A major factor driving the engineering services outsourcing market is the rise in need for automation and increase in adoption of integrated solutions for analyzing and designing engineering systems. 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. Furthermore, the growing penetration of mobile devices such as smartphones, tablets, and laptops has increased the ease and accessibility of engineering software. This, in turn, is bolstering the growth of the engineering software market. Furthermore, the introduction of cloud-based engineering software products is boosting the market. However, high maintenance cost and license cost coupled with a lack of technical expertise in operating these software is hindering the market. Executives in many industries are now beginning to believe that sending product development offshore is a smart way to not only reduce the cost of product innovation, but to accelerate speed to market and add the sheer scale of innovation. Another factor restraining the engineering services outsourcing market is that the cost differential between professionals in advanced and developing countries is declining. A significant opportunity for key players lies in the rising demand for engineering services outsourcing from the marine, ship building, and offshore sectors in order to provide reliable operating platforms to overcome extreme weather conditions, physical space constraints, and remote locations.

Engineering Services Outsourcing Market - Segmentation

The engineering services outsourcing market can be segmented based on type, industry, and region. In terms of type, the engineering services outsourcing market can be classified into on-shore and off-shore. Based on industry, the engineering services outsourcing market can be divided into aerospace, automotive, manufacturing, consumer electronics and semiconductor, pharmaceuticals, and telecom.

In terms of region, the engineering services outsourcing market can be categorized into North America, Europe, Asia Pacific, Middle East & Africa, and South America. Asia Pacific is a prominent region of the engineering services outsourcing market due to the low-skilled talent pool and conducive government regulations in countries such as India, Malaysia, and the Philippines.

Engineering Services Outsourcing Market - Key Players

 Major vendors operating in the engineering services outsourcing market are M Group, Fareva, Deaton Engineering, Inc., Aricent Group, Cybage Software Pvt. Ltd., EPAM Systems, Inc., GlobalLogic, Cyient, and Pactera Technology International Ltd. Leading players in the market are focusing on the introduction of advanced services in order to strengthen their position and expand their customer base. Companies are extensively investing in R&D operations and are focusing on providing customized services to their customers.

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The regional analysis covers:

  • North America (U.S. and Canada)
  • Latin America (Mexico, Brazil, Peru, Chile, and others)
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Engineering Services Outsourcing Market

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