Why Outsourcing of Engineering Services is Expanding at a Compound Annual Growth Rate of 22.9% [2021-2028]

By Daya Mukherjee May 24, 2021
Why Outsourcing of Engineering Services is Expanding at a Compound Annual Growth Rate of 22.9% [2021-2028]

According to a report published in Globe Newswire, the global outsourcing of engineering services will be on a rise in the upcoming years. What’s surprising is the rate of growth. The report suggests that the engineering service industry outsourcing is expected to grow at a whopping compound annual growth rate (CAGR) of 22.9% from 2021 to 2028. It is a comprehensive study that also provides a qualitative and quantitative analysis for the global engineering services outsourcing (ESO) market (currently valued at 1.06 trillion) for the corresponding period in some of the leading geographies, such as North America, Europe, Asia-Pacific, and RoW.

The question is: why this much rise? The various benefits companies get by outsourcing their engineering work to third parties, such as decreased overhead costs, shortened product development cycles, and better efficiency are increasing the number of companies opting for engineering outsourcing services, worldwide. Not only that, we are also witnessing globalization of R&D activities (making setting global systems of delivery as a part of their business strategy) as well as the rising demand for integrating the latest technologies in the product offerings, which are also playing important roles in the process.

Another major reason for this rising demand for engineering service outsourcing is collaborations of big giants in the market with start-up companies, including manufacturing firms and other industry ecosystem players. These initiatives are expected to provide new opportunities for the growth of the engineering services outsourcing market. In order to deliver smart solutions to the clients, the ESO model has been revised at regular intervals. Be it automation, analytics, the internet of things (IoT), or anything else, there has been a paradigm shift from core-engineering services to embedded engineering solutions. Technological innovations have increased the demand for integrated IT solutions with products, capable of ensuring scheduled maintenance and avoiding downtimes by forecasting events in advance.

If we talk about Engineering Service Providers (ESP), they are coming up with integrated service delivery models, which allow for much broader engagement portfolios and an authorized framework to facilitate advancement, as well as accelerate both bottom-line and top-line growth. We are living in the era of Industry 4.0 that relies on smart manufacturing and latest industrial solutions pertaining to robotics, AI, and machine learning, which ultimately, generates opportunities for IT integration in the global engineering service sector. End-use industries and business verticals, in particular, especially automotive and aerospace, demand dedicated hardware manufacturing capabilities. These industries are emerging as potential clients for companies in digital transformation services.


Although the rising demand for automation mechanisms is expected to create a handful of opportunities for ESPs, the engineering services market analysis also shows that new entrants may find it hard to establish a foothold in the global engineering outsourcing market due to a looming lack of project expertise, technology expertise, and business operations. Another major issue is that digitization also requires cybersecurity. Different business verticals exchange a large amount of data on a daily basis, including information related to monitoring, load management, and QA. Original equipment manufacturers (OEM) and suppliers also exchange similar confidential information in order to enhance collaboration on design, development, and support.

Lack of control over turnaround time and the quality of the final product might also negatively impact the growth of the engineering services outsourcing market Therefore, it is of utmost importance that manufacturers are undertaking enough preventive measures to protect the Intellectual Property (IP), for example, properly assessing the network operations, securing crucial information using access codes, and retaining the original versions of source codes and design.

Final Thoughts

The COVID-19 pandemic has had a huge impact on how businesses used to operate. Subsequent lockdowns in countries across the world have forced companies to consider ESO options in order to stay competitive and profitable. To cut down costs and improve bottom line, outsource engineering & architectural services to India. Talk to one of our experts in the team today and know how we can help you achieve your business goals better.

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