Automotive Engineering Services Outsourcing Market - Growth, Trends, and Forecast (2019 - 2024)

The Automotive Engineering Services Outsourcing Market has been segmented by Application Type (Designing, Prototyping, System Integration, and Testing), Location Type (On-shore and Off-shore), and Geography.

Market Snapshot

automotive engineering services outsourcing market
Study Period:

2018-2024

Base Year:

2018

Largest Market:

Europe

Key Players:

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Automotive Engineering Services Outsourcing Market

The automotive engineering services outsourcing market is expected to register a CAGR of ~15%, during the forecast period, 2019-2024.

  • The key drivers responsible for this growth include an increase in the automotive R&D spending by global companies, the outsourcing of activities by automotive companies, and increased ER&D investment by telecom and software companies in autonomous and connected car verticals.
  • Smart mobility, electrification, and Internet of Things (IoT) are the major technology-driven trends, emerging across the industry. Also, service providers are increasingly being viewed as important partners, who can help accelerate the time-to-market and reduce costs in this fast-changing automotive landscape.
  • Europe is expected to occupy the largest share in this market, followed by Asia and the Americas. Within Europe, Germany is expected to be the largest market. In Asia-Pacific, India is expected to be the market with the highest share. Most of the automotive engineering service companies are concentrated in Europe.

Scope of the Report

The automotive engineering services outsourcing market has been segmented by application type, location type, and geography.

By Application Type
Designing
Prototyping
System Integration
Testing
By Location Type
On-shore
Off-shore
Geography
North America
United States
Canada
Mexico
Europe
Germany
United Kingdom
France
Rest of Europe
Asia-Pacific
China
Japan
India
Rest of Asia-Pacific
Rest of the World
Brazil
Middle East & Africa

Report scope can be customized per your requirements. Click here.

Key Market Trends

Auto Manufacturers' and OEMs' Continued Preference toward Outsourcing Services for Cost Savings and Product Integration

Automotive companies around the world are experiencing the need to increase their engineering prowess, to keep pace with increasing consumer demand for new products. While such demand is generally good for business, it creates greater challenges.

The constant pressure to quickly design, prototype, manufacture, and launch new products in the marketplace, in response to ever-decreasing product lifecycles and greater demand, is placing a strain on the in-house engineering workforces and processes of companies.

Auto manufacturers contribute to the major share of the total engineering services outsourcing to the service companies. The top-30 major global engineering outsourcers, like Volkswagen, BMW, Daimler, Renault, and Ford, among others, have an aggregated engineering services spending of nearly USD 8 billion, per year. The following are the advantages that the companies can obtain, by using outsourcing services:

  • Outsourcing supports a variety of capabilities, like designing the parts of a vehicle, working with a company's supply chain, and developing aftermarket support for engineering. Information technology support also can help in making product development processes faster and more efficient.
  • Service providers that have a global presence and industrialized capabilities, help companies typically achieve 30-50% savings on labor costs, by leveraging quality resources at low-cost geographies.
  • Outsourcing also gives companies access to experienced talents, along with the knowledge of local trends. Products tailored to the interests of local markets can offer manufacturers a competitive advantage, in terms of increasing their market share in the targeted geographies.
  • Outsourcing helps companies accomplish the integration of product development, with related functions, such as engineering and warranty management. For instance, companies that integrate their warranty system with the engineering design function can receive timely information from their customers, regarding design failures, resolve them, and resume production without impacting sales, which, in turn, reduces warranty costs.

Thus, by augmenting their existing engineering capabilities with outsourced services, to meet today's product development needs, companies are reducing operating costs and are positioning themselves for a sustained higher growth, which is expected to drive the market studied.

automotive engineering services outsourcing market

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India Expected to Dominate the Asia-Pacific Region

India accounts for around 30% of all the available Engineering Service Outsourcing (ESO) and Business Process Outsourcing (BPO) talent, among the low-cost countries. The ESO sector, in the country, is shifting from the traditional back-office services of the past to the more high-end technology work, and is now serving several growing sectors, including automotive.

In India, within its Global In-House Centers (GICs), approximately 50,000 full-time equivalents (FTEs) are expected to be part of the automotive engineering services market. Apart from GICs, there are multiple other Indian automotive service providers and traditional BP/IT service providers, that also deliver automotive engineering services.

The top cities for the delivery of automotive engineering in India are Pune, Chennai, Bangalore, and Delhi. Pune and Chennai are the largest automotive hubs in India, comprising nearly 50% of the automotive engineering service market.

Key skills in the automotive engineering service market include testing and quality assurance, software development for embedded systems, systems engineering, electrical/electronic engineering, engine design, and design analysis.

The strong track record of Indian vendors, in outsourcing services, has won the confidence in the automobile companies’ capabilities. The average experience of outsourcing vendors in the country is nearly 14 years. Many of these vendors already have a great deal of experience in winning and retaining contracts. The delivery models are well established, and the vendors have the ability to maintain a very high level of quality control, which has been the driving force behind the market, over the past few years.

One offset to the growth of the current market in the country may be the lack of proper infrastructure, with respect to the automotive segment. While the IT infrastructure is adequate for the current requirements, the same is not true for other sectors (including automotive), requiring much investment, in the future.

automotive engineering services outsourcing market

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Competitive Landscape

Some of the major players dominating the market are AVL, Bertrandt AG, EDAG Engineering GmbH, IAV GmbH, and Altran.

Major Players

  1. AVL
  2. Bertrandt AG
  3. EDAG Engineering GmbH
  4. IAV GmbH
  5. Altran

* Complete list of players covered available in the table of contents below

automotive engineering services outsourcing market

Table of Contents

  1. 1. INTRODUCTION

    1. 1.1 Study Deliverables

    2. 1.2 Study Assumptions

    3. 1.3 Scope of the Study

  2. 2. RESEARCH METHODOLOGY

  3. 3. EXECUTIVE SUMMARY

  4. 4. MARKET DYNAMICS

    1. 4.1 Market Overview

    2. 4.2 Market Drivers

    3. 4.3 Market Restraints

    4. 4.4 Industry Attractiveness - Porter's Five Forces Analysis

      1. 4.4.1 Threat of New Entrants

      2. 4.4.2 Bargaining Power of Buyers/Consumers

      3. 4.4.3 Bargaining Power of Suppliers

      4. 4.4.4 Threat of Substitute Products

      5. 4.4.5 Intensity of Competitive Rivalry

  5. 5. MARKET SEGMENTATION

    1. 5.1 By Application Type

      1. 5.1.1 Designing

      2. 5.1.2 Prototyping

      3. 5.1.3 System Integration

      4. 5.1.4 Testing

    2. 5.2 By Location Type

      1. 5.2.1 On-shore

      2. 5.2.2 Off-shore

    3. 5.3 Geography

      1. 5.3.1 North America

        1. 5.3.1.1 United States

        2. 5.3.1.2 Canada

        3. 5.3.1.3 Mexico

      2. 5.3.2 Europe

        1. 5.3.2.1 Germany

        2. 5.3.2.2 United Kingdom

        3. 5.3.2.3 France

        4. 5.3.2.4 Rest of Europe

      3. 5.3.3 Asia-Pacific

        1. 5.3.3.1 China

        2. 5.3.3.2 Japan

        3. 5.3.3.3 India

        4. 5.3.3.4 Rest of Asia-Pacific

      4. 5.3.4 Rest of the World

        1. 5.3.4.1 Brazil

        2. 5.3.4.2 Middle East & Africa

  6. 6. COMPETITIVE LANDSCAPE

    1. 6.1 Company Profiles

      1. 6.1.1 AVL

      2. 6.1.2 Bertrandt AG

      3. 6.1.3 EDAG Engineering GmbH

      4. 6.1.4 IAV GmbH

      5. 6.1.5 HORIBA Ltd

      6. 6.1.6 Altran

      7. 6.1.7 FEV Group

      8. 6.1.8 MBtech Group GmbH (A subsidiary of AKKA Technologies)

      9. 6.1.9 Alten GmbH

      10. 6.1.10 P3 Automotive GmbH

      11. 6.1.11 Altair Engineering Inc.

      12. 6.1.12 Gigatronik

      13. 6.1.13 ESG Elektroniksystem- und Logistik-GmbH

      14. 6.1.14 RLE International Group

      15. 6.1.15 ASAP Holding GmbH

    2. *List Not Exhaustive
  7. 7. MARKET OPPORTUNITIES AND FUTURE TRENDS

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