Global Automotive Engineering Services Outsourcing Market Size, Share & Industry Trends Analysis Report By Application, By Location (On-shore and Off-shore), By Service (Prototyping, System Integration, Testing, Designing), By Regional Outlook and Forecast, 2022 - 2028
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Get in-depth analysis of the COVID-19 impact on the Automotive Engineering Services Outsourcing Market
Market Report Description
The Global Automotive Engineering Services Outsourcing Market size is expected to reach $161.3 billion by 2028, rising at a market growth of 10.2% CAGR during the forecast period.
Automotive engineering services are a subcategory of vehicle engineering that include advanced safety engineering in automotive as well as electrical, electronics, mechanical, software, and electrical systems. The development, operation, design, and manufacture of passenger cars and commercial vehicles all heavily rely on automotive engineering services.
Additionally, these services are designed to enhance the production process and save additional costs. The expansion of the market will be fueled by the rising demand for in-vehicle technological advances that would enable greater penetration of services like remote diagnostics and smart infotainment, as well as enhanced connection solutions.
Furthermore, intellectual property laws limit service providers from continuously using the current technology, and new invention costs a significant amount of time and money, which is one of the key barriers to market growth.
The expansion of the automotive ESO market is anticipated to be fueled by the expanding technological capabilities of Engineering Service Providers (ESPs) to achieve research and development (R&D) and product innovation in their offerings for connected automobiles, vehicle positioning, and guidance systems. The government's increasing efforts to promote the use of green automobiles in order to reduce the emissions of dangerous gases are also fueling the growth of the automotive ESO market.
COVID-19 Impact Analysis
Worldwide, the COVID-19 pandemic has had an impact on a wide range of businesses. Due to the COVID-19 pandemic, several nations implemented a total lockdown for a short period of time, which slowed down vehicle manufacturing. Due to the worldwide closure of manufacturing facilities, vehicle sales suffered. The worldwide automobile sector was impacted by the COVID-19 pandemic. The pandemic had little effect on the market for automotive engineering services. However, with a constrained capacity and the necessary safety precautions in place, the majority of manufacturers have resumed producing cars.
Market Growth Factors
Continued preference of auto manufacturers and OEMS' toward outsourcing services
The process of hiring non-physical engineering tasks from a third party, like design, system integration, prototyping, and testing, is known as engineering services outsourcing (ESO). These services are required from the very beginning of the process of designing and developing a product, which makes use of a number of databases and IT-based technologies. Automobile manufacturers have come to the realization that they need to enhance their technical skills and creativity in order to meet customer demand. Many governments help manufacturers by providing incentives and tax breaks in return for their production of fully compliant vehicles. This supports the growth of the regional market
OEMS are putting more emphasis on enhancing core competencies to increase adoption.
Automotive original equipment manufacturers (OEMs) are looking for ways to hone their core capabilities in the modern marketplace while outsourcing other facets of their operations to service providers. The growing use of outsourcing for automotive engineering services is influenced by a wide range of forces, including globalization, market fragmentation, operational complexity, and technical hurdles. There have been several partnerships between OEMs and engineering service companies. This supports the growth of the regional market.
Market Restraining Factors
The rising trend of in-house design might restrict growth.
Despite upbeat growth predictions, the automotive engineering service outsourcing industry is dealing with a number of challenges that are somewhat limiting its development. Many manufacturers are concentrating on creating these elements in-house rather than outsourcing them to engineering service providers because of the intricacy involved in the design of the gearbox, powertrain, and engine. This may limit the development of the market. Additionally, internal staff members are more likely than contractors' personnel to have a longer tenure at a facility and have a deeper understanding of the company's goals. The regional market would expand as a result of this factor.
Based on application, the Automotive Engineering Service Outsourcing Market is divided into Infotainment & Connectivity, Body & Chassis, Powertrain & After-Treatment, Autonomous Driving/ADAS, and Others. The Autonomous Driving/ADAS segment is showcasing the promising growth rate during the forecast period. This is because the use of autonomous driving/ADAS is anticipated to rise significantly throughout the forecast period as a result of its capacity to recognize, identify, and provide safe mobility in its surroundings. Lidar, inertial measurement units, GPS, radar, and other sensors make up ADAS, which provides sophisticated sensory information and control systems to traverse courses.
Based on services, the Automotive Engineering Service Outsourcing Market is divided into Designing, Prototyping, System Integration, Testing, and Others. In terms of revenue, the prototyping segment led the Automotive Engineering Services Outsourcing Market in 2021. This is attributable to the automobile industry's growing use of 3D printing technology to create models of whole cars or assembly prototypes. With the use of 3D printing technology, producers may easily see flaws in the prototype and promptly fix them, enabling a cost-effective strategy. Companies are using 3D CAD software more often to enhance design quality, boost efficiency, establish a database for production, and improve communications via documentation.
Based on location, the Automotive Engineering Service Outsourcing Market is divided into on-shore and off-shore. In the automotive engineering service outsourcing market, the off-shore segment is registering a phenomenal growth rate during the anticipated period. This is explained by OEMs' growing propensity for outsourcing their services to low-cost nations like China, India, Brazil, Ukraine, and Mexico. India is heavily favored by OEMs since it has the most engineering degrees and the right capabilities compared to other low-cost nations for ESO, fueling the expansion in this area.
|Market size value in 2021||USD 82.9 Billion|
|Market size forecast in 2028||USD 161.3 Billion|
|Historical Period||2018 to 2020|
|Forecast Period||2022 to 2028|
|Revenue Growth Rate||CAGR of 10.2% from 2022 to 2028|
|Number of Pages||251|
|Number of Tables||384|
|Report coverage||Market Trends, Revenue Estimation and Forecast, Segmentation Analysis, Regional and Country Breakdown, Competitive Landscape, Companies Strategic Developments, Company Profiling|
|Segments covered||Location, Service, Application, Region|
|Country scope||US, Canada, Mexico, Germany, UK, France, Russia, Spain, Italy, China, Japan, India, South Korea, Singapore, Malaysia, Brazil, Argentina, UAE, Saudi Arabia, South Africa, Nigeria|
Based on region, the automotive engineering service outsourcing market is categorized into North America, Europe, Asia Pacific, and LAMEA. The Asia Pacific region dominated the Automotive Engineering Service Outsourcing Market in terms of revenue share in 2021. This is explained by China's rapid adoption of electric vehicles for personal transportation. Government regulations encouraging the use of green technology and minimizing or reducing emissions urge the category to expand throughout the predicted period. Additionally, the presence of skilled and affordable labor has contributed to the growth of ESPs in the Asia Pacific region.
Free Valuable Insights: Global Automotive Engineering Services Outsourcing Market size to reach USD 161.3 Billion by 2028
KBV Cardinal Matrix - Automotive Engineering Services Outsourcing Market Competition Analysis
The major strategies followed by the market participants are Acquisitions. Based on the Analysis presented in the Cardinal matrix; HCL Technologies Ltd., Capgemini SE, Tech Mahindra Limited, and AKKA Technologies SE are the forerunners in the Automotive Engineering Services Outsourcing Market. Companies such as ALTEN, Horiba Ltd., and Altair Engineering, Inc. are some of the key innovators in Automotive Engineering Services Outsourcing Market.
The market research report covers the analysis of key stake holders of the market. Key companies profiled in the report include AKKA Technologies SE (Adecco Group AG) update parent company, Altair Engineering, Inc., ALTEN, AVL List GmbH, Horiba Ltd., Capgemini SE, HCL Technologies Ltd. (HCL Enterprises), Tech Mahindra Limited, FEV Group GmbH, and RLE International Group.
Strategies deployed in Automotive Engineering Services Outsourcing Market
» Partnerships, Collaborations and Agreements:
- Nov-2022: AVL teamed up with Rohde & Schwarz, a Germany-based developer of electronic capital goods. Through this collaboration, the companies jointly introduced a solution for electromagnetic compatibility (EMC) data analysis of electric drive trains under real conditions. The new solution would enhance and advance EMC validation of vehicles and e-drives.
- Oct-2022: Altair teamed up with Mazagon Dock Shipbuilders (MDL), a shipbuilding company. Through this collaboration, MDL would use Altair's solutions including hydrodynamic loading, structural fidelity calculations, simulation-driven design, and validation, among others. Further, the collaboration would result in the discovery and development of defense and marine technology making vessels efficient and safer.
- Dec-2021: HCL Technologies came into partnership with MetaMedia, a US-based provider of the content distribution platform. As per the partnership agreement, HCL would provide MetaMedia with engineering, deployment, and design services to support MetaMedia in its international expansion.
- Jun-2021: AVL collaborated with the Institute of Advanced Automotive Propulsion Systems (IAAPS), a UK-based provider and developer of technologies, tools, and systems. The collaboration involves research on engine systems and deploying results of IAAPS's research on AVL's potential commercial products.
- Jun-2021: FEV partnered with Wipro, an India-based multinational provider of IT services. The partnership involves jointly developing and marketing solutions intended for Software Defined Vehicles (SDV). Through this partnership and cashing on their respective expertise, the companies aim to advance product development.
- May-2021: AKKA came into partnership with AURA AERO, a France-based manufacturer of aircraft. The partnership involves supporting Aura in developing electric aerobatic aircraft and Electrical Regional Aircraft. The partnership further reflects Akka's devotion to contributing to the future of aviation.
» Product Launches and Product Expansions:
- May-2022: HORIBA added a VI-grade DiM250 simulator to its already existing offering. This new feature reinforces Horiba's market position and allows Horiba to cater to the dynamic needs the future mobility.
- Apr-2022: FEV Group introduced FEV.io. The new launch focuses on advancing and streamlining innovative power and interdisciplinary collaboration in autonomous and automated driving, as well as delivering more value to its clients in this industry.
» Acquisitions and Mergers:
- Jun-2022: Altair took over Concept Engineering, a Germany-based developer of electronic system visualization software. The acquisition allows Altair to better serve its customers by providing its clients with a full-fledged and quick visual presentation of complicated system models.
- Mar-2022: Altair took over Powersim, a US-based provider of design and simulation tools. The integration of Powersim broadens Altair's electronic system design technology into the power electronics segment. Additionally, the addition of Powersim's expertise and power electronics' in-depth knowledge completes Altair's electric motor design and other application offerings.
- Mar-2022: ALTEN Technology USA, part of Alten Group combined with Syncroness, would operate under the name ALTEN Technology USA. The merger involves integrating Alten's global reach and Syncroness's experience in specialized product development, thereby enabling Alten to deliver more value to its clients.
- Mar-2022: FEV took over Paragon Electrodrive GmbH's Aachen site, intending to broaden its knowledge, and testing capacities in electric motors, complete e-drives, and power electronics. Additionally, the acquisition reinforces its electrification and engineering solutions offerings.
- Jan-2022: HCL Technologies took over Starschema, a US-based developer of technology outsourcing platforms. The acquisition involves integrating Starschema's competence in data and HCL's presence in market segments going through a data-driven transformation. Moreover, the acquisition strengthens HCL's digital engineering capabilities and further expands its market presence in Central and Eastern Europe.
- Nov-2021: ALTEN acquired Expert Global Solutions, a technology service provider. The acquisition would expand Alten's market presence in India, and would further enhance Alten's competence in various innovative areas including industrial digital transformation, and automotive embedded solutions.
- Nov-2021: ALTEN took over CIeNET Group, a US-based provider of software development and technical consulting services. The acquisition integrates Alten's technology diversity and CleNET's digital innovation to advance the business transformation of its clients. Additionally, the acquisition would expand Alten's market position in China.
» Business and Geographical Expansions:
- Nov-2022: Capgemini unveiled Capgemini Invent in Denmark. Capgemini Invent is a new brand under Capgemini focused on design, strategy, transformation, and innovation. The new brand's launch strengthens Capgemini's devotion to supporting clients in Denmark.
- Jul-2022: FEV India, part of FEV Group expanded its global footprint by setting up a new office in Pune, India. The new office focuses on intelligent mobility solutions and complete vehicle development. The FEV's new office in India further provides its customers with a one-stop-shop solution for intelligent mobility and vehicle development.
- Jan-2022: HCL Technologies expanded its global footprint by establishing an innovation center in Alberta, Canada. The innovation center focuses on engineering and R&D services.
- Apr-2021: Capgemini introduced Capgemini Engineering. The new launch fits well and complements the group's already existing business product offerings and further aids Capgemini's leadership position in the intelligent segment.
Scope of the Study
Market Segments Covered in the Report:
- Powertrain & After-treatment
- Body & Chassis
- Infotainment & Connectivity
- Autonomous Driving/ADAS
- System Integration
- North America
- Rest of North America
- Rest of Europe
- Asia Pacific
- South Korea
- Rest of Asia Pacific
- Saudi Arabia
- South Africa
- Rest of LAMEA
Key Market Players
List of Companies Profiled in the Report:
- AKKA Technologies SE (Adecco Group AG) update parent company
- Altair Engineering, Inc.
- AVL List GmbH
- Horiba Ltd.
- Capgemini SE
- HCL Technologies Ltd. (HCL Enterprises)
- Tech Mahindra Limited
- FEV Group GmbH
- RLE International Group
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North America Automotive Engineering Services Outsourcing Market Report 2022-2028
Europe Automotive Engineering Services Outsourcing Market Report 2022-2028
Asia Pacific Automotive Engineering Services Outsourcing Market Report 2022-2028
LAMEA Automotive Engineering Services Outsourcing Market Report 2022-2028
How valuable will the Automotive Engineering Services Outsourcing Market be in the future?
The global Automotive Engineering Services Outsourcing Market size is expected to reach $161.3 billion by 2028.
What are the key driving factors and challenges in the Automotive Engineering Services Outsourcing Market?
Continued preference of auto manufacturers and OEMS' toward outsourcing services are driving the market in coming years, however, The rising trend of in-house design might restrict growth restraints the growth of the market.
What are the major top companies in the competitive landscape?
AKKA Technologies SE (Adecco Group AG) update parent company, Altair Engineering, Inc., ALTEN, AVL List GmbH, Horiba Ltd., Capgemini SE, HCL Technologies Ltd. (HCL Enterprises), Tech Mahindra Limited, FEV Group GmbH, and RLE International Group.
At what CAGR is the Automotive Engineering Services Outsourcing Market estimate to grow in the forecast period?
The expected CAGR of the Automotive Engineering Services Outsourcing Market is 10.2% from 2022 to 2028.
Which segment shows a high revenue share of the Automotive Engineering Services Outsourcing Market in 2021?
The On-shore segment acquired maximum revenue share in the Global Automotive Engineering Services Outsourcing Market by Location in 2021 thereby, achieving a market value of $96.5 billion by 2028.
Which region dominated the Automotive Engineering Services Outsourcing Market in 2021?
The Asia Pacific market dominated the Global Automotive Engineering Services Outsourcing Market by Region in 2021, and would continue to be a dominant market till 2028; thereby, achieving a market value of $64.1 billion by 2028.