The engineering services outsourcing market is a multi-billion dollar industry providing engineering design and product development services to original equipment manufacturers (OEMs) and technology companies globally. Engineering services involve various kinds of product design and testing services including mechanical design, embedded software, simulation, validation and semiconductor design and manufacturing. The outsourcing of engineering services helps clients focus on their core business areas while benefiting from technical expertise and competitive costs.

Global Engineering Services Outsourcing Market is estimated to be valued at USD 1,834.9 Mn in 2024 and is expected to reach USD 9,254.1 Mn by 2031, growing at a compound annual growth rate (CAGR) of 26.1% from 2024 to 2031.
Key Takeaways
Key players operating in the engineering services outsourcing market are AKKA, Alten Group, Capgemini Engineering, Entelect, HCL Technologies Limited, Infosys Limited, Tata Elxsi, Tata Consultancy Services Limited., Tech Mahindra Limited, Wipro Limited.

The Engineering Services Outsourcing Market size is witnessing increasing demand from sectors like automotive, aerospace, semiconductor, telecom, and healthcare industries looking to enhance innovation through outsourcing of design and development work.

Major companies are expanding their global delivery centers in low-cost countries like India, China, Philippines and Eastern Europe to cater to growing clientele.
Market key trends
The engineering services outsourcing market is driven by one major trend - the increasing adoption of digital technologies in engineering. Advanced technologies like IoT, AI, cloud and analytics are enabling engineering and product development for smarter products and experience-driven solutions. Use of simulation, virtual/augmented reality and 3D printing is improving design, testing and manufacturing processes. This is leading to reduced time-to-market and costs for clients while helping service providers offer value-added solutions.
Porter’s Analysis
Threat of new entrants: Engineering services outsourcing requires significant investments and expertise, posing a moderate threat of new entrants.
Bargaining power of buyers: Large enterprises have significant bargaining power as buyers due to the ability to easily switch between vendors, posing medium threat.
Bargaining power of suppliers: The availability of many engineering services outsourcing vendors gives buyers more options, reducing individual vendors' bargaining power.
Threat of new substitutes: Engineering Services Outsourcing Market Challenges and Opportunities like insourcing or using freelancers pose minimal threats due to the cost advantages and specialized expertise offered by outsourcing vendors.
Competitive rivalry: The engineering services outsourcing market is highly competitive due to many global and regional players offering similar services.
Geographical regions
North America currently accounts for the largest share of the engineering services outsourcing market value due to increased adoption among industries like automotive, aviation, and electronics.
Asia-Pacific is forecasted to be the fastest-growing region during the forecast period owing to growth in industries, availability of low-cost skilled resources, and government initiatives promoting technology adoption in various countries.

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