Engineering Services Outsourcing Market Analysis North America, APAC, Europe, South America, Middle East and Africa - US, China, Germany, UK, Canada, France, India, Japan, Italy, South Korea - Size and Forecast 2025-2029

Engineering Services Outsourcing Market Size 2025-2029

The engineering services outsourcing market size is forecast to increase by USD 317 billion at a CAGR of 20.3% between 2024 and 2029.

• The market is experiencing significant growth, driven by the adoption of advanced technologies such as artificial intelligence, robotics, and computer-aided design in the engineering industry. These technologies enable cost savings through automation and increased efficiency. Additionally, the collaboration between engineering firms and outsourcing partners for co-innovation is a key trend. However, challenges persist, including the risk of data security breaches and intellectual property theft. To mitigate these risks, companies are implementing multi-factor authentication, platform-as-a-service solutions, and digital asset management systems. The integration of machine learning and industry 4.0 technologies, such as digital twin, predictive maintenance, and edge analytics, is also driving growth in the market. Furthermore, the adoption of 5G technology and smart manufacturing is expected to revolutionize the industry, leading to increased demand for engineering services. Overall, the market is poised for growth, with a focus on innovation, efficiency, and security.

What will be the Size of the Market During the Forecast Period?

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• The market continues to experience strong growth, driven by the increasing adoption of cloud-based engineering software, automation, and integrated solutions. The market's size is significant, with spending on engineering outsourcing services projected to reach billions of dollars annually. Key trends include the integration of artificial intelligence (AI) and machine learning (ML) into engineering processes, the rise of digital twins, and the increasing use of platform-as-a-service (PaaS) for engineering applications.
• Moreover, intellectual property protection and data security remain critical concerns, with outsourcing companies investing heavily in advanced security measures. The market encompasses various engineering disciplines, including computer-aided design (CAD), computer-aided engineering (CAE), computer-aided manufacturing (CAM), telecom, robotics, CNC machines, and 3D printing. The market's direction is toward digitalization, with a focus on improving efficiency, reducing costs, and enhancing innovation.

How is this Engineering Services Outsourcing Industry segmented and which is the largest segment?

The engineering services outsourcing industry research report provides comprehensive data (region-wise segment analysis), with forecasts and estimates in "USD billion" for the period 2025-2029, as well as historical data from 2019-2023 for the following segments.

• End-user
  • Automotive
  • Consumer electronics
  • Telecom
  • Semiconductor
  • Others
• Sourcing
  • Offshore
  • Onshore
• Type
  • Designing
  • Prototyping
  • System integration
  • Testing
  • Others
• Geography
  • North America
    • Canada
    • US
  • APAC
    • China
    • India
    • Japan
    • South Korea
  • Europe
    • Germany
    • UK
    • France
    • Italy
  • South America
  • Middle East and Africa

By End-user Insights

• The automotive segment is estimated to witness significant growth during the forecast period.

The market is experiencing significant growth, particularly within the automotive sector. Driven by consumer demands for connectivity, electrification, and safety features, automakers are focusing on developing smart, fuel-efficient vehicles that comply with emission regulations. The introduction of new products and variants, such as electric cars, car electronics, and telematics, is further fueling demand. Cost reduction, less time-to-market, and increasing competition are key factors propelling the sector's growth. To remain competitive, automotive manufacturers are embracing cost-effective solutions, including Platform-as-a-Service (PaaS), Artificial Intelligence (AI), Machine Learning (ML), and Intellectual Property (IP) protection. Digitalization trends, such as Industrial automation, Control services, Mobility, Smart Products, Digital collaboration tools, and 5G networks, are also contributing to the market's expansion.

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The automotive segment was valued at USD 32.90 billion in 2019 and showed a gradual increase during the forecast period.

Regional Analysis

• North America is estimated to contribute 41% to the growth of the global market during the forecast period.

Technavio's analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period.

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The market in North America is anticipated to dominate the global landscape due to the high number of outsourcing agreements signed by US companies with service providers in low-cost countries. With the US being the largest source of outsourcing demand both domestically and internationally, cost and labor arbitrage have been significant drivers for engineering services outsourcing in this region. However, the need for shorter product lifecycles and increased innovation frequency is expected to become the primary growth factor for the North American market.

Market Dynamics

Our researchers analyzed the data with 2024 as the base year, along with the key drivers, trends, and challenges. A holistic analysis of drivers will help companies refine their marketing strategies to gain a competitive advantage.

What are the key market drivers leading to the rise in the adoption of Engineering Services Outsourcing Industry?

Cost savings from lower labor wages is the key driver of the market.

• The market experiences significant growth due to the cost advantages derived from delegating work to low-cost labor markets. Labor arbitrage, an expansion of the global economy, facilitates the transfer of business processes to less expensive locations. By outsourcing engineering services, organizations maintain a lean workforce and save on employee hiring, retention, infrastructure, and office space costs. Additionally, access to skilled talent and advanced technologies in other countries becomes easier and more direct. Platform-as-a-Service (PaaS), Artificial Intelligence (AI), and Machine Learning (ML) are transforming engineering services through integrated solutions. Cloud-based engineering software, such as Computer-aided design (CAD), Computer-aided engineering (CAE), Computer-aided manufacturing (CAM), and 3D printing, are increasingly utilized.
• Digital collaboration tools and M2M (Machine-to-Machine) communication enable real-time data sharing and analysis. Advanced technologies like AI, ML, and robotics are integrated into engineering services, leading to automation and increased efficiency. Telecom companies and OEMs are major consumers of engineering services, with a focus on IT integration, cybersecurity, and digitalization. Industrial automation, control services, and enterprise asset management are other areas of growth. 5G networks and digital twins are driving innovation in engineering services, with applications in mobility, smart products, and edge analytics. PLM/MES systems and customized services cater to specific industry requirements. Despite the benefits, data security remains a concern, with cyberattacks posing a significant threat.

What are the market trends shaping the Engineering Services Outsourcing Industry?

Collaborative co-innovation partnership with outsourcing firms is the upcoming market trend.

• Engineering services outsourcing continues to be a strategic solution for businesses seeking expertise and cost savings. Collaborative partnerships in this arena necessitate risk-sharing and value-creation through joint functioning between clients and service providers. In contrast, co-innovation involves the exchange of knowledge to develop new solutions and products, generating significant value for both parties. Despite increasing risks and challenges, many companies successfully manage engineering services outsourcing relationships. Service providers are viewed as integral to their clients' supply chains, offering integrated solutions. Platform-as-a-Service (PaaS), Artificial Intelligence (AI), and Machine Learning (ML) are transforming the industry, with IP protection and data security being paramount.
• Cloud-based engineering software, including Computer-aided design (CAD), Computer-aided engineering (CAE), Computer-aided manufacturing (CAM), and 3D printing, are increasingly utilized. Advancements in technology, such as 5G networks, digital collaboration tools, and IT integration, are driving innovation. Telecom, OEMs, and robotics industries are major consumers of engineering services outsourcing. Automation, servitization, M2M, and edge analytics are key trends. Digitalization and industrial automation, including control services, mobility, smart products, and digital twins, are also transforming the landscape. Engineering services outsourcing providers offer testing services, designing services, and customized solutions using software tools and PLM/MES systems. Cybersecurity is a significant concern, with cyberattacks posing a threat to intellectual property and data.

What challenges does the Engineering Services Outsourcing Industry face during its growth?

Risk of intellectual property theft and misuse is a key challenge affecting the industry growth.

• The market encounters significant challenges due to intellectual property (IP) theft concerns. Many organizations safeguard their research and development activities with strict non-disclosure policies and procedures to prevent IP leakage. Engineering services providers work under contractual agreements, ensuring that any data, designs, or developments created or derived belong to the client. Artificial intelligence (AI) and machine learning (ML) are transforming the engineering services outsourcing landscape. Platform-as-a-Service (PaaS), cloud-based engineering software, and automation are integral to these technologies. Digital collaboration tools, 5G networks, and digital twins facilitate real-time data sharing and analysis. Designing services, testing services, and IT integration are crucial components of engineering services outsourcing.
• Industries like telecom, robotics, and OEMs leverage these services for product development and innovation. Cybersecurity is a priority, with concerns around cyberattacks and data security. Engineering services outsourcing encompasses on-shore and off-shore models. Offshoring allows access to specialized skills and cost savings. Integrated solutions, such as PLM/MES systems, and customized services cater to diverse client needs. The market is evolving, with trends like servitization, M2M (Machine-to-Machine), edge analytics, and 3D printing. Industrial automation, control services, mobility, smart products, and enterprise asset management are key areas of focus. Cloud-based engineering software, CNC machines, and computer-aided design (CAD), computer-aided engineering (CAE), and computer-aided manufacturing (CAM) tools are essential components of this market.

Exclusive Customer Landscape

The engineering services outsourcing market forecasting report includes the adoption lifecycle of the market, covering from the innovator's stage to the laggard's stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the engineering services outsourcing market report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their market growth analysis strategies.

 Customer Landscape

Key Companies & Market Insights

Companies are implementing various strategies, such as strategic alliances, engineering services outsourcing market forecast, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the industry.

Altair Engineering Inc. - The company offers engineering services outsourcing which helps in predictive simulation, optimizing performance, and saving time.

The industry research and growth report includes detailed analyses of the competitive landscape of the market and information about key companies, including:

• Alten SA
• Capgemini Services SAS
• Cyient Ltd.
• Deaton Engineering Inc.
• EPAM Systems Inc.
• FEV Consulting GmbH
• Flatworld Solutions Inc.
• HCL Technologies Ltd.
• Hitachi Ltd.
• Honeywell International Inc.
• Infosys Ltd.
• Leedeo Engineering S.L.
• Mahindra and Mahindra Ltd.
• Quest Global Services Pte. Ltd.
• Siemens AG
• Sonata Software Ltd.
• SSA Business Solutions India
• Tata Consultancy Services Ltd.
• Wipro Ltd.

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 industry 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.

Research Analyst Overview

Engineering services outsourcing has emerged as a significant trend in the global industry landscape, driven by the increasing demand for specialized expertise, cost savings, and the need for faster time-to-market. This market encompasses a wide range of services, including Platform-as-a-Service (PaaS), Artificial Intelligence (AI) and Machine Learning (ML), Intellectual Property (IP) management, Data Security, and Digital Twin development. The adoption of advanced technologies such as AI, ML, and Digital Twin solutions is transforming the market. These technologies enable the creation of integrated solutions, including cloud-based engineering software, auto designing, Computer-Aided Design (CAD), Computer-Aided Engineering (CAE), Computer-Aided Manufacturing (CAM), and 3D printing.

In addition, PaaS platforms provide a flexible and scalable infrastructure for hosting and deploying these solutions, while AI and ML algorithms enable the automation of complex engineering processes. The telecom sector is a major consumer of engineering services outsourcing, with a focus on 5G network deployment and integration. IT integration, OEM manufacturing, and robotics are other key areas where outsourcing is prevalent. The trend towards servitization, where companies offer services as a value-added component of their products, is also driving demand for engineering services outsourcing. The market is characterized by a shift towards offshoring, with companies looking to leverage the cost advantages offered by low-cost labor markets.

However, the increasing concern over data security and cyberattacks is leading to a growing trend towards on-shoring and nearshoring. The use of digital collaboration tools and M2M (machine-to-machine) communication is facilitating remote working and real-time collaboration between teams located in different parts of the world. The adoption of cloud-based engineering software and PLM/MES systems is enabling greater digitalization and industrial automation. Edge analytics and control services are other emerging areas of focus, as companies seek to gain real-time insights into their operations and optimize performance. The integration of cybersecurity measures is also becoming essential to protect intellectual property and ensure data security.

Furthermore, the market is expected to continue growing, driven by the increasing adoption of advanced technologies and the need for specialized expertise. The market is also being shaped by the ongoing digitalization of industries and the trend towards servitization. Companies that can provide customized services and integrated solutions are likely to gain a competitive advantage in this market.

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What are the Key Data Covered in this Engineering Services Outsourcing Market Research and Growth Report?

• CAGR of the Engineering Services Outsourcing industry during the forecast period
• Detailed information on factors that will drive the growth and forecasting between 2025 and 2029
• Precise estimation of the size of the market and its contribution of the industry in focus to the parent market
• Accurate predictions about upcoming growth and trends and changes in consumer behaviour
• Growth of the market across North America, APAC, Europe, South America, and Middle East and Africa
• Thorough analysis of the market's competitive landscape and detailed information about companies
• Comprehensive analysis of factors that will challenge the engineering services outsourcing market growth of industry companies

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