The Key Insights of the Engineering Services Outsourcing Market

The engineering services outsourcing companies are rising with the innovation of technologies.

FREMONT, CA: The global engineering services (ESO) market is expected to witness a rise in recent years. The adoption of engineering services outsourcing (ESO) is expected to increase among engineering service providers (ESPs) and original equipment manufacturers (OEMs).

There are several types of ESO market services, some of which include designing, prototyping, integrating, testing, and more. In recent years, the testing segment has grown as customers demand shorter turnaround times through manual intervention. The OEMs also hire ESPs to provide software testing services to design and redesign more compatible and bug-free products. There is also an expectation that the designing segment will significantly increase during the forecast period. Design engineering outsourcing is becoming more popular as design complexity increases and costs rise. During the forecast period, the demand for design engineering is expected to rise due to increasing architectural, visual, graphic, and industrial design needs. Outsourcing engineering services for cost-effective prototyping products has also grown due to consumer electronics' growing popularity.

Market Dynamics

Trends: It is slowly creating opportunities for IT integration in ESPs as Industry 4.0 encourages the creation of intelligent manufacturing solutions based on robotics, artificial intelligence (AI), and machine learning (ML). A wide range of end-use industries is looking to providers of digital transformation services, including automotive and aerospace. Also, ESPs will have immense opportunities to automate open systems. The lack of business operations, technology, and project expertise may make it challenging for newcomers to establish a foothold in the market.

Drivers: Market growth is expected to be driven by OEM and ESO collaborations in the forecast period. In addition to improving quality, controlling costs, and increasing expertise across various capabilities, OEMs gain benefits from outsourcing services. Aside from IoT, M2M, embedded electronics, and other digital transformation solutions that OEMs prefer to integrate with ESPs, manufacturers prefer ESPs to integrate advanced technologies. 

Opportunities: Within the forecast period, industrial and communications technologies will progress rapidly, resulting in increased demand for ESO services. Engineering service providers provide IIoT engineering services to OEMs in response to the growing focus on digitization in numerous industry verticals. The IoT engineering services include integrating IoT platforms and developing IoT devices. With the growing use of robotics, industrial automation, and 3D printing, ESO providers will become increasingly important as the Industrial Internet of Things (IIoT) becomes more prevalent and secure.

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Challenges: The threat of cyberattacks increases with digitization. The exchange of data between various end-use industries and verticals and service providers and OEMs may leave them vulnerable to data thefts and cyberattacks. A similar exchange of confidential data occurs between service providers, suppliers, and OEMs regarding technology, performance, design, and development specifications. Keeping original versions of the design and assessing network operations are some of the ways outsourcing providers protect Intellectual Property.