Engineering Services Outsourcing Market Projected to Reach US$ 3.8 Billion by 2027

The study undertaken by Astute Analytica forecasts growth in revenue of the global engineering services outsourcing market from US$1430.75 billion in 2021 to US$3803.21 billion by 2027. The market is registering a compound annual growth rate (CAGR) of 17.7% during the forecast period. Companies now are strategically seeking ways to reduce operating expenses to boost revenue and enhance growth.

Outsourcing services help to reduce labor costs, machines, additional space, skill training and other technology-related costs. Outsourcing of business activities has become a tool for offering services at other locations cost-effectively. Outsourcing of engineering services ensures that both knowledge and risk are substantially distributed among a network of connected companies.

Download free sample report here. 

Market Dynamics

According to the International Data Corporation (IDC), Internet of Things (IoT) spending in the European region will surpass US$241 billion by 2022. Germany spends US$35 billion in IoT followed by France and UK with a spending of US$25 billion in IoT sector. The cost of labor is often high in developed countries, such as the U.S., Japan and Germany. They prefer outsourcing their engineering services to offshore destinations, such as India, Indonesia, China, Malaysia, which can provide a favorable environment and skilled workers at a low cost. However, the loss of managerial control over connected outsourcing companies may hinder the market growth over the projection period.

Industrial Insights

In terms of industry, the market is segmented into aerospace, automotive, computing systems, construction, consumer electronics, energy, machinery, healthcare, industrial, medical devices, semiconductors, telecom and others. The telecom industry holds the highest market share in 2021. Increase in wireless communication, which is a fast-growing sector, and using mobile with cloud-based technology is driving the segmental growth. However, the medical devices segment holds the highest CAGR during the forecast period.

Regional Insights

Europe holds the highest share in the global engineering services and outsourcing market in 2021. The shortage of skilled software developers and increasing demand for digital transformation is also propelling the market growth. However, the Asia Pacific engineering services and outsourcing market is projected to growth at the highest annual growth rate of 19.9% owing to the emerging local outsourcing demand, manufacturing base and cost arbitrage in developing countries such as China and India.

Impact of COVID-19

The impact of the outbreak of the COVID-19 pandemic and the subsequent lockdowns in various countries across the world on the engineering services and outsourcing market varied depending on the end-use industries and industry verticals. Various industrial facilities, manufacturing plants, and public transport were shut down temporarily as part of the efforts to control the spread of the disease. The automotive and construction sectors saw a fall in demand. However, the market is expected to grow positively during the forecast period as economies are slowly recovering in the post-pandemic period.

Sources: Press materials received from the company and additional information gleaned from the company’s website.