Engineering Services Outsourcing (ESO) Market Share, Size, Trends, Industry Analysis Report, By Application; By Location (On Shore, Off Shore); By Region; Segment Forecast, 2024 - 2032
- Published Date:Jan-2024
- Pages: 114
- Format: PDF
- Report ID: PM1030
- Base Year: 2023
- Historical Data: 2019-2022
The global engineering services outsourcing (ESO) market was valued at USD 2296.88 million in 2023 and is expected to grow at a CAGR of 26.8% during the forecast period.
The rapidly growing market industry involves outsourcing various engineering services to external companies or service providers. This sector has gained significant traction in recent years due to the increasing complexity of engineering projects, cost pressures, and the need for specialized expertise. ESO encompasses various engineering disciplines, including mechanical engineering, civil engineering, electrical engineering, software engineering, and more. Companies in multiple industries, such as automotive, aerospace, energy, telecommunications, and healthcare, increasingly turn to ESO providers to leverage their technical capabilities, reduce costs, and improve efficiency.
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ESO market is cost-saving and outsourcing engineering services that allow companies to access global talent pools and lower labor costs in countries like India, China, and Eastern Europe. By outsourcing non-core engineering functions, companies can focus their internal resources on strategic activities while benefiting from specialized engineering expertise at a lower cost.
Furthermore, ESO is access to a broader skill set and technological advancements. ESO providers often deeply understand the latest engineering tools, software, and methodologies. They can bring fresh perspectives, innovation, and domain-specific knowledge to tackle complex engineering challenges. This helps companies accelerate their product development cycles, improve quality, and stay competitive in a rapidly evolving marketplace.
The research report offers a quantitative and qualitative analysis of the Engineering Services Outsourcing Market to enable effective decision-making. It covers the key trends and growth opportunities anticipated to have a favorable impact on the market. Besides, the study covers segment and regional revenue forecasts for market assessment.
The COVID-19 pandemic posed initial challenges for the market, including disruptions in the global supply chain and project timelines due to lockdowns and travel restrictions. However, the ESO sector demonstrated resilience by swiftly adopting remote work setups and digital technologies, ensuring the continuity of engineering services. The pandemic accelerated the use of virtual collaboration tools and highlighted the industry's importance of agility and flexibility. Companies sought ESO providers with diverse skill sets and global delivery capabilities to mitigate risks and ensure business continuity. As the global economy recovers, the ESO market is expected to continue growing, focusing on remote collaboration, digital transformation, and risk management.
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The rising shift from core-engineering services to embedded engineering solutions
As technology becomes more integrated into various products and systems, engineering services are no longer limited to standalone components but are increasingly embedded within the overall effect or system design. This shift requires engineering service providers to understand the entire product lifecycle, from concept and design to manufacturing and support. By offering embedded engineering solutions, ESPs can provide comprehensive and specialized expertise, enabling OEMs to streamline their development processes, reduce time to market, and enhance product performance.
The growing partnerships and collaborations between OEMs and ESPs have become a significant driver of growth in the engineering services industry. OEMs increasingly rely on external engineering expertise to supplement their in-house capabilities and meet the evolving market demands. By partnering with ESPs, OEMs can tap into their specialized skills, knowledge, and resources to enhance their product development capabilities, address technical challenges, and access a wider talent pool. These collaborations enable OEMs to focus on their core competencies while leveraging the domain-specific expertise of ESPs, resulting in improved efficiency, cost savings, and innovation.
Furthermore, partnerships and collaborations foster knowledge exchange, cross-pollination of ideas, and technology transfer between OEMs and ESPs. This collaborative approach drives innovation and enables the development of cutting-edge solutions that can address complex engineering problems. It also allows OEMs to stay ahead of competitors by leveraging the expertise of ESPs in emerging technologies such as artificial intelligence, the Internet of Things (IoT), and advanced analytics.
The market is primarily segmented based on application, location, and region.
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By Application Analysis
Industrial segment accounted for the largest revenue share of the market
The industrial sector holds the largest revenue share in the global Engineering Services Outsourcing (ESO) industry and is expected to maintain its dominant position in the forecast period. In this sector, various exploration facilities, including blasting, drilling, crushing, and tunnels, are increasingly embracing digitization. Industrial product manufacturing companies are modernizing their IT infrastructure, adopting public, private, and hybrid platforms, driving automation, and simplifying outdated processes to stay competitive.
By Location Analysis
On-shore segment dominated the market with the largest shares in 2022
The on-shore segment dominates the market, holding the largest share. This is particularly evident in emerging nations where automotive outsourcing vendors focus on serving original equipment manufacturers (OEMs) for activities like modeling, development, and other specialized processes. The on-shore sector is anticipated to continue to maintain its leadership position.
The offshore segment involves providing ESO services across international borders. However, this segment is expected to grow at a slower pace compared to the on-shore sector. Factors contributing to this slower growth include worldwide inflationary pressures, high turnover rates, expenses related to training, and a growing preference for on-shore outsourcing partnerships instead of offshore arrangements.
Asia Pacific dominated the global market in 2022
The Asia Pacific region commands the largest market share in the Engineering Services Outsourcing (ESO) industry and is poised to maintain its dominance in the coming years. This is driven by the outsourcing of manufacturing and related activities by major automobile OEMs to countries like India, the Philippines, and China, taking advantage of the availability of a low-cost workforce. As a result, outsourcing providers focusing on the automobile industry are realigning their strategies to cater to this demand.
The Asia Pacific region is projected to experience the highest growth rate during the forecast period. Many global companies are establishing their work hubs in Asian countries for economic reasons. The ability to keep operating costs low and access a skilled talent pool aligns with the current trend, enabling ESO providers to strike favorable deals.
Market Key Players & Competitive Insight
The Engineering Services Outsourcing (ESO) market is witnessing intense competition driven by a combination of factors, including advancements in technology, globalization, and the need for cost-effective solutions. Key players in this market are continuously expanding their service portfolios and geographic reach to meet the growing demand for engineering services across various industries such as automotive, aerospace, healthcare, and manufacturing. Additionally, the integration of digital technologies like AI, IoT, and blockchain into engineering services is creating new avenues for competition and innovation.
Some of the major players operating in the global market include:
- Accenture Plc
- Altair Engineering, Inc.
- Amazon Web Services (AWS)
- ASAP Holding GmbH
- AVL List GmbH
- Boston Engineering Corporation
- Capgemini SE
- Cybage Software Pvt. Ltd.
- EPAM Systems Inc.
- HCL Technologies Limited
- Infosys Limited
- International Business Machines Corporation
- Microsoft Azure
- QuEST Global Services Pte. Ltd.
- Sonata Software Limited
- Tata Consultancy Services Limited
- Tech Mahindra Limited (Mahindra Group)
- Wipro Limited
- In March 2023, Deloitte acquired the assets of Optimal Design Co., a prominent product engineering services company focused on smart connected products and IoT devices. The collaboration between Deloitte and Optimal Design will enable clients to drive innovation and accomplish their digital transformation objectives by combining their respective expertise.
- In February, AFMG acquired Ideenion, a German outsourcing provider specializing in automotive engineering services. This acquisition strengthens AFMG's position in the market and expands its capabilities in the automotive sector. By integrating Ideenion's expertise, AFMG aims to provide enhanced outsourcing solutions to its clients in the automotive industry.
Engineering Services Outsourcing (ESO) Market Report Scope
Market size value in 2024
USD 2908.31 million
Revenue forecast in 2032
USD 19,490.67 million
26.8% from 2024 – 2032
2019 – 2022
2024 – 2032
Revenue in USD million and CAGR from 2024 to 2032
By Application, By Location, By Region
North America, Europe, Asia Pacific, Latin America; Middle East & Africa
Report customization as per your requirements with respect to countries, region and segmentation.
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The engineering services outsourcing (ESO) market report covering key segments are application, location, and region.
Engineering Services Outsourcing (ESO) Market Size Worth $19,490.67 Million By 2032
The global engineering services outsourcing (ESO) market is expected to grow at a CAGR of 26.8% during the forecast period.
Asia Pacific is leading the global market
key driving factors in engineering services outsourcing (ESO) market The rising shift from core-engineering services to embedded engineering solutions