Global ESO Market To Hit US$415b By 2020

October 14th 2014 - Tuesday

The global engineering services outsourcing (ESO) market is expected to reach US$415.74 billion by 2020, according to a new study by Grand View Research, Inc. Increased cost pressures on global firms resulting in constrained R&D budgets is a primary driver for market growth over the forecast period. Additionally, shorter product life cycles owing to dynamic consumer buying behaviour are also expected to favourably impact market growth.

Enhancement in production process, cost advantage and lowered time-to-market are some of the other factors expected to boost market growth. Threat of IP theft may pose a challenge to industry growth as it results in significant losses for businesses. Legal enforcements in a few offshore locations make it difficult for prosecuting firms which misuse confidential data and patents.

Key findings from the report, entitled “Engineering Services Outsourcing Market Analysis By End-Use (Aerospace, Automotive, Construction, Consumer Electronics, Semiconductors, Pharmaceuticals, Telecom) And Segment Forecasts To 2020”, suggest:

ESO demand in telecom accounted for over 20% of the overall market in 2013. Telecommunications service providers have been implementing operations and business support systems for ensuring smooth business operations. This requires significant back-end expertise and equipment, thus propelling the use of ESO in systems. The consumer electronics segment is expected to witness the fastest growth over the forecast period. This can be primarily attributed to drastic reduction in product life cycles, forcing companies to bring about product innovations at a faster rate.

  • APAC was the largest regional market in 2013, accounting for over 50% of the total demand; it is further expected to remain the market leader over the forecast period. This is on account of the presence of a large talent pool, solid manufacturing base, emerging local demand and cost arbitrage in countries such as China and India. The market in Europe is expected to grow at a CAGR of over 25% from 2014 to 2020, owing to an inclination among several European firms to outsource engineering activities within the same country or within Western European nations for ensuring regulatory compliance.
  • Key industry players include HCL Technologies, Wipro, Tata Consultancy Services and Infosys. Other companies operating in the market include VanceInfo Technologies, Tata ELXSI, QuEST Global, MindTree, KPIT Cummins Infosystems, Infotech Enterprises, IGATE Corp., GlobalLogic, EPAM Services, Cybage Software, Calsoft Labs, Aricent Group amongst others.