Engineering Outsourcing Service Trends in 2020

Engineering Outsourcing Services: Trends in 2020

Engineering services outsourcing (ESO) has flourished in the face of globalization, wherein production firms such as in manufacturing stay competitive by hiring engineering service providers. (ESPs). The ESPs provide a wide variety of services like designing components, generating drawings, and end-to-end product development.

In a recent research conducted by Polaris Market Research, the ESO market is set to be worth a stunning $1.82 trillion by 2026, with a compound annual growth rate of 21.0% from 2019 to 2026. The following trends are anticipated to contribute to this growth this 2020.

Diversified Services

The key engineering sectors that will see a continued rise in demand this year are construction, automotive, aerospace, and telecommunications as services are diversified to include other specialized competencies like prototyping, process engineering, infrastructure development, product design, testing, simulation, among others.

The telecom segment is expected to contribute a significant slice to the revenue share in the coming years, boosted by the boom of artificial intelligence (AI) and robotic process automation (RPA).

Thanks to upskilling and tailor outsourcing, ESPs are more capable of delivering customized solutions by updating the skills and training of their workforce to cover as much base as possible.

Customer-centric Approach

Production companies are clamoring to shorten product cycles and time-to-market due to the shift to a customer-centric approach in almost all industries, driven by possible revenue growth targets of 4-8% more above its market, according to a Bain & Company research.

Another trend forecast for outsourcing in 2020 reported that client-centered services will go beyond the usual service delivery method to offer a holistic experience to the customer, enhancing the services to encourage storytelling, aesthetic, and value creation.

Meanwhile, a Fact.MR study has shown that enhancing customer service is imperative to the revenue growth of a company, thereby increasing investments in the market for product engineering, leveraging outsourcing firms to meet rapidly changing industry trends and consumer demands.

Asia to Dominate ESO Market

The Asia Pacific region is seen to dominate the ESO market, as Europe and North America companies avail their services more than any other continent in the world and as China and India continue to be the biggest service providers in the industry. This forecast is attributed to the low service cost and the growing number of engineering professionals in the said countries.

In the aerospace ESO market, the USA retains its position as the region with the largest revenue share, maintaining its streak this year and beyond. Europe, on the other hand, will likely experience sluggish growth due to fierce competition and economic conditions.

Collaborative Partnerships and Co-innovation

Collaboration between firms is expected to grow this year, highlighting value sharing and risk sharing. Co-innovation will involve the development of new solutions by two parties, jointly managing knowledge flow across the business spectrum.

Shifting to Core Tasks

To maximize the time of in-house employees, companies traditionally rely on outsourced personnel to supplement the workforce and handle back-office and non-core tasks. However, this year marks another shift in the trend as ESPs are expected to have a bigger hand in performing more advanced functions in critical business areas.

This would require the ESO partner to have more reliable technical expertise that clients can bank on to increase productivity and overall efficiency. ESOs are also more equipped today technology- and skills-wise to bring shorter product cycles while maintaining the quality of the product or service being delivered.

Consider Engineering Outsourcing

Engineering services outsourcing has faced ebbs and flows in the market, but 2020 looks to be a good year for the sector. With the advancement of technology and the higher drive to upskill and update knowledge on various engineering fields, outsourcing service providers are taking the industry to new heights.

If you are looking for a reliable and experienced engineering service provider that can provide structural, civil design, mechanical, and electrical engineering, as well as architectural services, send us a message and learn how we can help you.