Market Trends of Global Engineering Services Outsourcing Industry
Rising Adoption of Integrated Solutions Driving the Growth of the Market
- Increasing industrial automation, along with the rising adoption of integrated solutions for analyzing and designing engineering systems, represents one of the key factors driving the growth of the market. Furthermore, the widespread utilization of engineering systems, such as computer-aided design (CAD), computer-aided engineering (CAE), computer-aided manufacturing (CAM), and electronic design automation (EDA) software, is also driving market growth. This software aid in enhancing the overall efficiencies of the production processes and can be operated by the user over smartphones, laptops, and tablets.
- Various technological advancements and the incorporation of digital transformational services are acting as other growth-inducing factors. Other factors, including the increasing utilization of strategic outsourcing services by the automotive, marine, and offshore sectors, along with the development of 3D printing solutions, are expected to drive the market further.
- There is a rise in preference for the outsourcing of engineering services among small and medium-sized engineering service providers, these services include, new product induction from conceptual design to final product development and validation, process engineering, automation, enterprise asset management, and overall business process enhancement. This attributes to witness lucrative growth of the global engineering services outsourcing market.
- Industrial firms that handle countless types of machinery and equipment have the burden of hiring a considerable workforce to operate them. It also gets very complicated to coordinate with all the workers, especially for companies that work with different equipment like engineering services.
- For such companies, automation is the best solution and way to advance in an increasingly digitized world.Automation reduces costs and enhances the quality of work. While human workers are efficient, they're prone to making errors that can be avoided when one automates the processes and operations.
- Automation also offers increased human safety. All these benefits make it worthwhile to outsource industrial automation services.Industrial automation and control services that empower companies to have better infrastructure and optimize their performance, address safety concerns more efficiently, and ultimately increase productivity.
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Various Technical Developments Along With Digital Transformational Services
- A key factor behind the engineering services outsourcing market is the quantum of technological convergence across varied verticals due to the advent of disruptive technologies like Mobility and Smart Products, which are driving customers to a more connected world. ESPs with a footprint across industry segments are better positioned to adopt best practices and technologies from unrelated industries.
- Digital technologies such as AI, IoT, and digital twins have rapidly grown over the last decade. The onset of COVID-19 gave rise to waves of digitalization that swept across industries and geographies. The pandemic and its subsequent impact have catalyzed enterprises accelerating their digital transformation journeys.
- It boosted the adoption of digital enablers that have the potential to optimize engineering processes across industrial sectors like automotive and aerospace through rapid product development, enterprise-wide connectivity, re-engineering of customer experiences, and operational excellence. With the slow uptake of technology being replaced by rapid digital acceleration, global players are gradually adapting to the new ecosystem.
- Digital engineering capabilities are being accelerated by the democratization of technology and the advent of 5G networks. For example, in the aerospace industry, digitalization reduces fuselage splice times by 95% at a higher quality. The rise of digital collaboration tools during the pandemic has introduced decentralization as another growth vector for outsourcing engineering services. Increasing collaboration between engineering service providers and OEMs and the globalization of R&D activities have increased outsourcing activities.
- The growing involvement of engineering services providers (ESPs) in supporting core engineering practices has reinforced offshoring efforts with a particular focus on activities like remote product development using technologies. When it comes to outsourcing, the blurring of the line between core and non-core activities has been marked by establishing industry-wide collaboration frameworks that combine the role and expertise of OEMs, suppliers, and pure software players.
- When considering the transformation of engineering services during the last twenty years, the role of technological growth cannot be overstated. In the past few years alone, engineering-intensive sectors have witnessed the advent of enablers like IoT, cloud, digital twins, analytics, extended realities (AR/VR), and AI.
- In Europe, automation, analytics, cybersecurity, and servitization are some trends observed across industries. With the manufacturing shop floor generating incredible volumes of data through control systems, more and more organizations realize the benefit of harnessing this information to make complex and informed decisions. IIoT has enabled this with technologies like machine-to-machine (M2M) systems, AI, edge analytics, and cloud solutions capable of hosting entire PLM/MESsystems.
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