Engineering Services Outsourcing Market Worth $1.49 Trillion by 2025

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The Global engineering services outsourcing (ESO) market is expected to reach USD 1.49 trillion by 2025, according to a new report by Grand View Research, Inc. ESO providers play a crucial role in providing mechanical, technical, and software support to their clients. Due to the growing complexity of product designing, prototyping, visual designing and engineering, and Product Lifecycle Management (PLM), the role of ESO vendors has become crucial to OEMs.

The engineering services outsourcing business was primarily aggregated under the Information Technology (IT) or the Business Process Outsourcing (BPO) industry. However, due to rapid technological advancement and growing demand, the ESO segment has evolved to expand its operation in the telecom, aerospace, automotive, healthcare, and other major verticals by spending heavily on product development and offering engineering expertise across various industries.

Multinationals based in the U.S., UK, Germany, France, and Japan among other developed nations are outsourcing services to countries such as India which provide skillful resources at lower prices.

The threat of Intellectual Property (IP) confidentiality breach is a barrier to the growing ESO demand. Companies have to be very vigilant to avoid IP theft, especially in a few offshore locations where prosecuting firms who allegedly misuse patents and confidential data is perceived as a difficult task due to the prevalent legal enforcements. IP theft results in significant losses for the business. As a result, the companies may not wish to share confidential data with engineering service providers.

Further key findings from the report suggest:

• Growing at a CAGR of around 30% over the forecast period, the offshore ESO segment is expected to account for a greater revenue share of the total market by 2025
• In 2016, the estimated size of the onshore ESO segment was around USD 70 billion
• The aerospace, consumer electronics, and telecom ESO segments are expected to witness a robust growth
• The aerospace ESO segment is expected to account for over 13% of the total revenue share by 2025 and is projected to be the fastest-growing over the forecast period
• Asia Pacific accounted for the largest market share of the global ESO industry in 2016; China, India, Vietnam, and the Philippines were the most sought after global outsourcing destinations
• The key industry participants include EPAM Systems, Inc., GlobalLogic, Infosys Limited, HCL Technologies Limited, Luxoft, QuEST Global Services Pte. Ltd., Tech Mahindra Limited, Wipro Limited, and Tata Consultancy Services Limited