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Engineering R&D Services Outsourcing Market Segmentation By Type (Off Shore and On Shore) and By End-User (Telecommunications, Automotive, Aerospace, Consumer Electronics, Pharmaceuticals, Construction, Semiconductor, Computing Systems and Others) – Global Demand Analysis & Opportunity Outlook 2027

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IN THE NEWS

  • February 2020: Infosys Limited announced that it has partnered with GE Appliance to streamline its IT operations and modernize its IT infrastructure and run IT in managed services mode. The Haier company is undergoing digital and workplace transformation through automation-driven support, the services of which are provided by Infosys.
  • August 2019: Wipro Limited announced that it has partnered with Indian Institute of Science (IISc) for conducting advanced applied research in 5G space, autonomous systems and robotics.

Market Overview

The engineering R&D services outsourcing includes the outsourcing of various non-physical engineering tasks, such as designing, conceptualization, validation, and automation. Also known as knowledge process outsourcing (KPO), these wide range of services aid organizations to focus on shorter delivery time in their product lifecycle and further enhance the quality of product delivery and raise their production scalability. The engineering R&D services outsourcing involves transfer of services such as CAD, design software, various prototypes, drafting, design validation protocols and others.

The global engineering R&D services outsourcing market recorded a value of about USD 8500 million in the year 2019 and is anticipated to grow with a CAGR close to 6% during the forecast period, i.e., 2019-2027. The market is further expected to touch a value of USD 14000 million approximately by the end of 2027.

Regional Growth Highlights during 2018-2027

The global engineering R&D services outsourcing market is segmented by regions into North America, Europe, Latin America, Asia Pacific and Middle East & Africa. Among these regions, the market in North America held the largest market share of nearly 50% in the year 2019. The market in the region is further anticipated to grow significantly on account of the presence of numerous companies in the region, with whom players from other regions are increasingly trying for strategic alliances. The market of engineering R&D services outsourcing in North America is considered to be a mature market. Backed by the need of the organizations in the region to stay focus into their prime work processes, along with the need to tackle the rising market competition and stay ahead competitively, there is a rising need amongst these organizations to outsource a major part of the non-physical engineering tasks. As a result, the organizations are increasingly developing initiatives for strategic alliances with companies based out of the emerging countries who can take over these tasks. The market in the region recorded a value near to USD 4000 million in the year 2019 and is anticipated to grow with a CAGR of around 7% during the forecast period.

Engineering R&D Services Outsourcing Market Share By Region

The study further incorporates Y-O-Y Growth, demand & supply and forecast future opportunity in North America (United States, Canada), Latin America (Brazil, Mexico, Argentina, Rest of LATAM), Europe (U.K., Germany, France, Italy, Spain, Hungary, BENELUX [Belgium, Netherlands, Luxembourg], NORDIC [Norway, Denmark, Sweden, Finland], Poland, Russia, Rest of Europe), Asia-Pacific (China, India, Japan, South Korea, Malaysia, Indonesia, Taiwan, Hong Kong, Australia, New Zealand, Rest of Asia-Pacific), Middle East and Africa (Israel, GCC [Saudi Arabia, UAE, Bahrain, Kuwait, Qatar, Oman], North Africa, South Africa, Rest of Middle East and Africa)

Market Segmentation Synopsis

By Type

The global engineering R&D services outsourcing market is segmented by type into onshore and offshore. Among these segments, the offshore segment registered the largest market share in the year 2018 and is expected to grow with a CAGR of about 6.5% during the forecast period. The presence of numerous advantages with the offshore engineering R&D services, such as accessibility to cheap labor and talented professionals from several developing nations worldwide, along with the presence of the experts of the service providers into the present-day industry procedures, which gives them an extra edge by being in closeness with the customer, are some of the factors anticipated to drive the growth of the offshore segment in the global engineering R&D services outsourcing market. CLICK TO DOWNLOAD SAMPLE REPORT

By End-User

The global engineering R&D services outsourcing market is segmented by end-user into telecommunication, automotive, aerospace, consumer electronics, pharmaceutical, construction, semiconductor, computing systems and others. Among these segments, the automotive segment registered the largest market share of about 21% in the year 2019 in the global engineering R&D services market. The segment registered a value near to USD 1800 million in the year 2019 and is anticipated to grow with a CAGR of around 7% during the forecast period. The automotive segment is further divided into designing, prototyping, system integration and testing. Among these segments, the designing segment recorded the largest market share in the year 2019 and is expected to grow with a CAGR close to 7.5% during the forecast period.

Engineering R&D Services Outsourcing Market Share By End-User

Market Drivers & Challenges

Growth Indicators

Rising Need for Shorter Delivery Time of Products Amongst Organizations to Drive the Market Growth

With the increasing globalization, several players are striving hard to expand their market activity as part of their growth strategies, as major share of their efforts are consumed by the mid-line processes that can be outsourced for achieving greater process efficiency. The growing market competition, along with the increasing demand for various industrial products worldwide is raising the need amongst these organizations to lower their product delivery time as shorter delivery cycle helps organizations to expand their market growth at a faster pace. As a result, the organizations are increasingly demanding for the outsourcing of their existing processes so as to have their focus towards other key areas of service delivery. The organizations are therefore increasing their strategic alliances and partnerships with various engineering R&D service providers, which is anticipated to drive the growth of the global engineering R&D services outsourcing market.

Growing Automation in Manufacturing Industries to Drive the Growth of the Global Engineering R&D Services Outsourcing Market

As organizations are in the need of various adopting external processes so as to reduce their product delivery cycle, many companies are focusing on the automation of production or manufacturing processes as part of their growth strategies. However, these automated processes require sharing of prototypes, designs, technology and other components, which in-turn is raising the need amongst the organizations to adopt to professional engineering R&D services providers, who have the expertise to deal with all these elements. Moreover, these service providers are also known to have expertise on a variety of designs, advanced designing techniques, collaborative R&D activities and others, which helps the organizations to achieve desired results. Such factors are anticipated to drive the growth of the global engineering R&D services outsourcing market.

Challenges

Fear of Maintaining the Same Quality Standards and SOP

Several companies follow unique technical standards for optimum efficiency of delivery processes. Most organizations fear that the lack of SOPs in the third-party entities may hamper their brand image or their product image, and ultimately, sales. Moreover, the fear of losing their uniqueness, along with the fear amongst the organizations of not having the expected quality standards while operating by the third-party entities are some of the factors anticipated to hamper the market growth.

Competitive Landscape

Some of the affluent industry leaders in the global engineering R&D services outsourcing market are Infosys Limited, Wipro Ltd., Huawei Technologies Co., Ltd., ALTEN Group, Altran Technologies, Tata Consultancy Services Ltd., L&T Technology Services Limited, Bertrandt AG, tech Mahindra Limited and EDAG Engineering Group AG.

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