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The Automotive Engineering Services Outsourcing (ESO) Market size is forecast to increase by USD 67.71 billion, at a CAGR of 11.3% between 2023 and 2028. One of the key factors driving the market growth is the outsourcing engineering services being a cost-effective solution. Maintaining in-house automotive engineering services can be expensive for automotive companies. As a result, these companies incur significant overhead expenses, including training, equipment, and administrative costs.
Therefore, such expenses can be eliminated by automotive engineering services outsourcing to companies such as Altair Engineering Inc. A key factor shaping the market growth is the implementation of new technologies and systems. Automotive manufacturers globally are significantly focusing on advanced and more sophisticated components and features. In addition, the implementation of artificial intelligence (AI), 3D printing, and machine learning is transforming the automotive industry. Furthermore, automobiles are being fitted with the Internet of Things (IoT) devices, which can be connected to smartphones and used to receive voice commands. Additionally, connected automobiles are advancing with guidance systems and infotainment & connectivity segment improvements, emphasizing green vehicles and fostering mass customization alongside mass production.
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The onshore segment is estimated to witness significant growth during the forecast period. The onshore segment in automotive engineering services can be referred to as when the company employs engineering services from within the same country. In addition, it helps in harnessing local talent without expanding in-house service teams. Furthermore, onshore outsourcing in automotive engineering services significantly reduces overhead costs associated with salaries and yields better results as it minimizes communication issues.
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The onshore segment was the largest segment and was valued at USD 40.96 billion in 2018. Moreover, the automotive industry is witnessing high growth due to the rapid development of new technologies and the growing adoption of electronic vehicles. In addition, this is encouraging original equipment manufacturers (OEMs) to produce new vehicles. Therefore, the onshore outsourcing service aids automotive manufacturers in improving the car business, as they can provide cars at lower prices because of the low operational cost of fleet management. Hence, such factors are fuelling the growth of this segment which in turn drives the market growth during the forecast period.
The rising disposable income will fuel the passenger vehicle segment which in turn will increase the market growth. The demand for passenger cars is fuelled by consumer preferences and the increasing disposable income of individuals belonging to the middle. In addition, the increasing disposable income and consumer purchasing power have led to an increase in the sales of passenger cars across India, resulting in subsequently increased demand for passenger cars. Moreover, specialized engineering service outsourcing providers have been constantly building massive competencies by providing training to employees and keeping them updated with advanced technologies to cater to the growing consumer base. Hence, such factors are fuelling the growth of this segment which in turn drives the market growth during the forecast period.
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APAC is estimated to contribute 43% to the growth of the global market during the forecast period. Technavio's analysts have provided extensive insight into the market forecast, detailing the regional trends and drivers influencing the market's trajectory throughout the forecast period. Several automotive companies in the region rely on automotive engineering service outsourcing to enhance their customer service. In addition, many enterprises from North America and Europe have outsourced their automotive engineering services to APAC because it helps them save on infrastructure costs and other costs. Moreover, they also take advantage of the local talent available at a low cost. Furthermore, this allows enterprises to reduce costs and focus on their core competencies. In addition, the growing need for cost reduction is one of the major market drivers of the automotive engineering services outsourcing market. Hence, such factors are driving the market growth in APAC during the forecast period.
The Automotive Engineering Services Outsourcing Market is driven by the recognition of outsourcing engineering services as a cost-effective solution in the Automotive ESO industry. A prominent trend in this market is the implementation of new technologies and systems, particularly in response to the rapid evolution of Autonomous, Connected, Electric, and Shared vehicles (ACES) and the integration of Advanced Driver Assistance Systems (ADAS).
However, the industry faces challenges such as threats to data security and privacy, highlighting the importance of robust cybersecurity measures. With a focus on Information Technology (IT) and the adoption of technologies like Bluetooth, Wireless Local Area Network (WLAN), and cloud solutions, automotive engineering service providers are enhancing connected systems and advanced sensory information integration. From the designing and prototyping segments to testing and manufacturing domains, outsourcing plays a pivotal role in delivering innovation across the automotive value chain, addressing key concerns such as carbon emissions and electrification of powertrains while meeting the demands of OEM investments in autonomous driving and energy-efficient automobiles.
One of the key factors driving the market growth is the outsourcing engineering services being a cost-effective solution. Maintaining in-house automotive engineering services can be expensive for automotive companies. As a result, these companies incur significant overhead expenses, including training, equipment, and administrative costs. Therefore, such expenses can be eliminated by automotive engineering services outsourcing to companies such as Altair Engineering Inc.
Moreover, automotive engineering services outsourcing can enable automotive manufacturers to save costs on facilities or equipment used for research projects. In addition, companies can also save costs on training and wages of research and development (R&D) engineers. Furthermore, outsourcing of R&D processes also helps enterprises in gaining access to advanced technologies. Hence, such factors are driving the market growth during the forecast period.
A key factor shaping the market growth is the implementation of new technologies and systems. Automotive manufacturers globally are significantly focusing on advanced and more sophisticated components and features. In addition, the implementation of artificial intelligence (AI), 3D printing, and machine learning is transforming the automotive industry. Furthermore, automobiles are being fitted with the Internet of Things (IoT) devices, which can be connected to smartphones and used to receive voice commands.
Moreover, automotive industry growth is anticipated to be driven by the swift development of new technologies and systems. In addition, prototyping is a time-saving technique used by the automotive company to replicate finished components to replicate finished components before introducing new technologies and systems into the vehicle. Hence, such factors are driving the market growth during the forecast period.
Threats to data security and privacy are one of the key challenges hindering the market growth. Security is the major concern for various enterprises that outsource automotive engineering tasks to third parties. In addition, while working on automotive engineering service tasks, enterprises must give companies permission to access confidential data. Furthermore, they do not have control over the internal processes, policies, and systems of engineering service providers and lack awareness about the security protocols used.
Moreover, digitization is leading to an increase in the volume of business data, which, in turn, is leading to a rise in incidences of security breaches and privacy invasions. For example, cybercrime costs businesses more than USD370 billion every year. Therefore, giving access to confidential data to companies can be a challenge for enterprises, which, in turn, hinders market growth during the forecast period.
The market forecasting report includes the adoption lifecycle of the market research and growth, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their market growth and trends strategies.
Global Market Customer Landscape
Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
Adecco Group AG: The company offers automotive engineering services outsourcing with ideation, design, validation, and implementation, so the organization gets the most out of resources through its subsidiary Akkodis.
Altair Engineering Inc: The company offers automotive engineering services outsourcing with optimization technologies at the beginning of the design process and to inform design direction from the beginning. This approach meets performance targets fast with the optimum balance of weight and cost.
Alten SA: The company offers automotive engineering services outsourcing such as AMOA and Business Analysis that is designed to help control working environments and master constraints of all kinds by providing all the specialized skills needed.
The Market growth and forecasting report also includes detailed analyses of the competitive landscape of the market and information about 20 market companies, including:
Market analysis and report of qualitative and quantitative analysis of companies has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.
The Automotive Engineering Services Outsourcing Market is witnessing a surge in demand driven by the rapid evolution of vehicle technology. Connectivity solutions, navigation, and smart infotainment systems are revolutionizing the driving experience while prioritizing passenger safety through features like remote diagnostics and ADAS (Advanced Driver Assistance Systems).
Engineering Service Providers (ESPs) play a crucial role in product innovation and the development of electric vehicles. With a focus on lightweight vehicles and virtual battery development, the market responds to the growing demand for sustainable transportation solutions. Electric vehicle sales are on the rise, prompting advancements in vehicle positioning and electrification technologies.
From Electronic Stability Control (ESC) to Autonomous Emergency Braking (AEB), safety remains paramount. Hydrogen, hybridization, and methane combustion offer alternatives to traditional fuel sources, driving engineering subsystems forward in mechanical engineering, electrical engineering, electronic engineering, safety engineering and software engineering disciplines.
The market extends beyond passenger cars to include motorcycles and trucks, each requiring specialized engineering services for vehicle customization and optimization. As the automotive industry continues to innovate, outsourcing engineering services ensures a competitive edge in delivering cutting-edge solutions to meet evolving consumer demands.
The market research report forecasts market growth by revenue at global, regional & country levels and provides an analysis of the latest trends and growth opportunities from 2018 to 2028.
Automotive Engineering Services Outsourcing Market Scope |
|
Report Coverage |
Details |
Page number |
160 |
Base year |
2023 |
Historic period |
2018-2022 |
Forecast period |
2024-2028 |
Growth momentum & CAGR |
Accelerate at a CAGR of 11.3% |
Market Growth 2024-2028 |
USD 67.71 billion |
Market structure |
Fragmented |
YoY growth 2023-2024(%) |
10.9 |
Regional analysis |
APAC, Europe, North America, South America, and Middle East and Africa |
Performing market contribution |
APAC at 43% |
Key countries |
US, China, Japan, Germany, and Italy |
Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
Key companies profiled |
Adecco Group AG, Altair Engineering Inc., Alten SA, AVL List GmbH, Belcan LLC, Bertrandt AG, Capgemini Service SAS, DesignTech Systems, EDAG Group, FEV Group GmbH, HCL Technologies Ltd., HORIBA Ltd., Larsen and Toubro Ltd., Mahindra and Mahindra Ltd., P3 group GmbH, Ricardo Plc, RLE INTERNATIONAL Group, Samsung Electronics Co. Ltd., T NET Japan Co. Ltd., and Volkswagen AG |
Market dynamics |
Parent market analysis, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, market growth analysis, COVID-19 impact and recovery analysis and future consumer dynamics, and Market condition analysis for the forecast period. |
Customization purview |
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1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by Location
7 Market Segmentation by Vehicle Type
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Trends
11 Vendor Landscape
12 Vendor Analysis
13 Appendix
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