Engineering Services Outsourcing Market Is Estimated To Witness High Growth Owing To Rapid Digitalization Across Industries

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The Engineering Services Outsourcing Market is estimated to be valued at USD 1834.9 Mn in 2024 and is expected to exhibit a CAGR of 26% over the forecast period 2024- 2031, as highlighted in a new report published by Coherent Market Insights.

The Engineering Services Outsourcing Market is primarily driven by rapid digitalization across industries. Most industries are integrating advanced technologies like IoT, AI, data analytics etc. into their operations which is creating demand for specialized engineering skills. Additionally, cost savings achieved through outsourcing non-core engineering work to low cost geographies is another major factor augmenting the growth of this market.

Key Market Trends: The Engineering Services Outsourcing Market is witnessing increasing adoption of specialty engineering services like product design and development, IoT consulting, automation, simulation etc. Manufacturers and technology companies are extensively outsourcing these specialized engineering requirements to ESO vendors in order to focus on their core businesses. Another trend gaining popularity is crowdsourcing of engineering ideas and designs through global innovation platforms. This is helping companies solve complex engineering problems at low costs. More coverage can be found in the sample copy.

Engineering Services Outsourcing Market: With advances in technology, product engineering services have become a significant component of outsourcing. Product engineering companies help design, develop and test new hardware and software products according to client specifications. This allows clients to focus on their core competencies while leveraging offshore engineering expertise. The product engineering segment is expected to grow at a CAGR of 28% during the forecast period driven by demand for new product development and innovation outsourcing.

Quality assurance and testing services ensure software and hardware products meet quality standards before release. With shorter development cycles, QA testing is increasingly being outsourced to specialized engineering firms. The QA and testing segment accounts for over 30% of the engineering services outsourcing market currently. Growth in this segment will be driven by the need to reduce costs and improve testing coverage. Investments in automation testing are also driving demand for QA outsourcing.

Key Market Takeaways: The Engineering Services Outsourcing market size was valued at USD 1834.9 Mn in 2024 and is anticipated to witness a CAGR of 26% during the forecast period 2024-2031. The market is growing due to increasing outsourcing of research and development by manufacturing and technology companies.

By Type, the Product Engineering segment is expected to hold a dominant position, accounting for over 40% of the market share. This is owing to the increasing need for new product design and development outsourcing.

By Application, the Automotive segment dominates and is expected to grow at a CAGR of 28% during the forecast period. This is due to strong investments in electric and autonomous vehicle engineering.

By region, North America is expected to hold the largest market share over the forecast period. This is due to early technology adoption and the large presence of engineering service providers in the region.

Competitor Insights:

• Wipro Ltd
• AKKA
• HCL Technologies
• Tata Consultancy Services
• Capgemini

Recent Developments in Engineering Services Outsourcing Market: In 2022, TCS acquired Servian, an Australian consulting firm focused on data and digital transformation and Infosys bought digital customer experience firm Kaleidoscope for $75 million. Wipro acquired cybersecurity firm Capco for $1.45 billion while Mphasis acquired Datalytyx, a data consulting firm for $182 million. Such consolidation drives are expected to further intensify with more deals on the anvil in 2023-24 as services giants look to offer more holistic and comprehensive solutions to clients. Full coverage of the report available here