New Delhi, Nov. 26, 2024 (GLOBE NEWSWIRE) -- The global engineering services outsourcing in automotive market was valued at US$ 59.43 billion in 2023 and is projected to reach US$ 132.20 billion by 2032 at a CAGR of 9.72% during the forecast period 2024–2032.
The engineering services outsourcing in automotive market has become an indispensable pillar of innovation and efficiency in the automotive industry. This sector's growth is underscored by recent developments, with major players like Tata Consultancy Services, Bosch, and Infosys leading significant advancements in electric vehicles (EVs) and autonomous vehicles (AVs). Notably, Tata Consultancy Services has been recognized as a leader in the Everest Group PEAK Matrix® for its advancements in Autonomous, Connected, Electric, and Shared (ACES) automotive engineering services. In the U.S., investments in electric vehicle and battery manufacturing have reached an impressive $312 billion since 2021, highlighting the sector's commitment to evolving technologies. Additionally, the announcement of 201,900 EV-related jobs in the U.S. reflects the growing demand for skilled labor in the field.
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Strategic partnerships are a hallmark of engineering services outsourcing in automotive market's evolution, with Jaguar Land Rover partnering with Allye Energy to develop a portable Battery Energy Storage System using second-life Range Rover batteries. This initiative supports Jaguar Land Rover's ambitious "Reimagine" strategy to achieve carbon neutrality by 2039, illustrating how sustainability is becoming a core focus area. Similarly, Volkswagen's collaboration with PowerCo SE to construct a gigafactory in Ontario signifies a pivotal shift towards localizing battery production in North America. Meanwhile, AI and machine learning are increasingly integrated into automotive engineering, as demonstrated by BMW and Audi's use of AI for predictive analytics to minimize downtime and reduce costs.
Geographically, the engineering services outsourcing in automotive market is experiencing dynamic changes, with the Asia-Pacific region, especially India and China, emerging as major hubs due to their skilled labor and cost advantages. Europe remains a significant player, driven by established giants like Bosch and Daimler, while the North American market is propelled by technological advancements and the adoption of electric and autonomous vehicles. The industry faces challenges, including ensuring data security and maintaining quality standards, yet the outlook remains robust. As companies navigate these complexities, the role of ESO will be crucial in driving innovation, enhancing efficiency, and maintaining a competitive edge in the automotive sector.
Key Findings in Engineering Services Outsourcing in Automotive Market
| Market Forecast (2032) | US$ 132.20 billion |
| CAGR | 9.72% |
| Largest Region (2023) | Europe (38.62%) |
| By Service Type | Design and Engineering (35.46%) |
| By Location | Offshore (55.90%) |
| By Application | Powertrain Components (34.28%) |
| By Pricing Model | Staff Augmentation (FTE based) (38.88%) |
| By Vehicle Type | Passenger Vehicles (50.71%) |
| By Propulsion Type | Internal Combustion Engine (53.25%) |
| By End User | Original Equipment Manufacturers (OEMs) (63.80%) |
| Top Drivers |
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| Top Trends |
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| Top Challenges |
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Capitalizing on Innovation: Opportunities in Design and Engineering Services in Automotive ESO to Generate More than 35% Market Revenue
The design and engineering services segment within the engineering services outsourcing in automotive market presents a wealth of lucrative opportunities in 2023. The global automotive industry is investing heavily in new technologies, propelling the ESO market forward. Electric vehicle (EV) development is surging, with global EV sales reached over 14.2 million units this year, according to the International Energy Agency. Automakers are allocating significant funds toward advanced driver-assistance systems (ADAS), with the ADAS market expected to exceed $30 billion in value. Investments in autonomous vehicle technology have surpassed $60 billion globally, driving demand for specialized design and engineering services. The average new vehicle now contains about 150 million lines of software code, highlighting the complexity and need for expert engineering. Connected cars are on the rise, with an estimated 76 million connected vehicles sold in 2023. The shortage of skilled automotive engineers, with a deficit of over 1 million professionals worldwide, is leading companies to outsource critical design functions. The market for automotive software is booming, valued at over $350 billion. Sustainability efforts are increasing demand for lightweight materials, projected to reach $140 billion in market value. Innovations like 3D printing are gaining traction, with the automotive 3D printing market expected to surpass $5 billion. These factors create a robust opportunity landscape for design and engineering services in automotive ESO.
Embracing Flexibility: Staff Augmentation's Lucrative Path in Automotive ESO is Heading Towards Nearly 40% Revenue Contribution
The staff augmentation (FTE-based) pricing model is emerging as a highly lucrative segment in the engineering services outsourcing in automotive market in 2023. The increasing complexity of vehicles, especially with electrification and autonomous technologies, has led to a surge in demand for specialized engineers. The automotive industry faces a shortage of over 1 million skilled professionals, prompting companies to adopt staff augmentation to access expertise swiftly. Investments in electric vehicle development are substantial, with automakers committing over $300 billion toward EV initiatives. Autonomous vehicle technology continues to attract massive funding, exceeding $70 billion globally. The connected car market is booming, with projections indicating over 400 million connected vehicles on the roads by 2025. Cybersecurity concerns are escalating, driving demand for experts through staff augmentation, as the automotive cybersecurity market is expected to reach $10 billion. The global shift toward Industry 4.0, with investments surpassing $200 billion, necessitates flexible staffing solutions. Staff augmentation enables companies to scale engineering teams efficiently, reducing time-to-market by up to six months. These dynamics position staff augmentation as a lucrative opportunity within the automotive ESO landscape.
Driving Forward: The Lucrative Potential of Powertrain Components
Powertrain components represent a significant and lucrative opportunity in the engineering services outsourcing in automotive market in 2023. The global shift toward cleaner energy sources has accelerated the electric powertrain market, with investments reaching over $100 billion. Electric vehicle production is surging, with over 14.2 million units sold this year. Hybrid vehicle sales are also robust, contributing to the demand for advanced powertrain engineering services. Governments worldwide are implementing stringent emission regulations, pushing automakers to invest heavily in powertrain innovations to meet targets like the EU's aim for a 55% reduction in CO₂ emissions by 2030. The development of hydrogen fuel cell technology is advancing, with investments over $20 billion. The global automotive battery market is projected to reach $168 billion, highlighting the focus on powertrain components. Innovations such as solid-state batteries are attracting significant investment, expected to revolutionize EV performance. The complexity of modern powertrains, including software integration and electronics, necessitates specialized engineering expertise. Over 6,000 patents related to powertrain technologies were filed in 2023, indicating a high level of innovation. These trends underscore the lucrative potential of powertrain components within the automotive ESO sector.
Asia Pacific's Rapid Growth in Engineering Services Outsourcing in Automotive Market
Asia Pacific is poised to grow at the highest CAGR of 10.91% in engineering services outsourcing within the automotive market and is projected to surpass North America by 2032, moving from its current third position to second. In 2023, Europe dominated the engineering services outsourcing in automotive market with a significant share, driven by the growing demand for technological innovation and the integration of embedded software into current models. China produced over 31 million vehicles in 2023, making it a key player in ESO. India's automotive industry, valued at around $100 billion, also significantly contributes to the region's growth. Both countries have large pools of skilled engineers, with China having over 4 million engineering graduates and India producing around 1.5 million engineering professionals annually.
Major players in this region include leading engineering and IT service companies, which contribute to regional growth through innovation and competitive service offerings. For example, India's IT services export revenue reached nearly $200 billion in 2023. The emphasis on software development services is strong in Asia Pacific, where the region's software industry is valued at approximately $500 billion. Customers seek software that is user-friendly, efficient, and easily integrated with other systems, driving the demand for advanced engineering services. Additionally, Asia Pacific's investment in R&D exceeded $300 billion in 2023, further supporting its projected growth in the ESO market.
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TCS: Dominating Automotive Engineering Services Outsourcing Through Innovation, Strategic Partnerships, and Global Expertise
Tata Consultancy Services (TCS) has positioned itself as a leading force in the engineering services outsourcing in automotive market through strategic investments, comprehensive service offerings, and a global presence. Recognized as a leader in the Everest Group PEAK Matrix® for Autonomous, Connected, Electric, and Shared (ACES) Automotive Engineering Services, TCS excels in developing solutions like Advanced Driver Assistance Systems (ADAS) and telematics. The company offers a range of products, including the TCS Mobility Suite on AWS, which features Connected Vehicle Solutions and Autonomous Vehicle Solutions, and its Intelligent Manufacturing offerings like TCS InTwin™, an AI platform for manufacturing digital twins. TCS's extensive product portfolio also includes the TCS Autonomous Development Platform, TCS Autoscape™ Solution Suite, CHAdeMO Protocol Tester Tool, and TCS DigiFleet™.
Key to TCS's engineering services outsourcing in automotive market leadership is its focus on digital transformation and strategic collaborations, such as its partnership with Jaguar Land Rover to accelerate digital initiatives. The company operates in 150 locations across 46 countries, supporting a diverse clientele with solutions that span product engineering services, integrated supply chain management, and sustainable design. TCS has made significant investments in building intellectual.
Engineering Services Outsourcing in Automotive Market Key Players
- North America
- Accenture
- Altair Engineering Inc.
- Cognizant Technology Solutions Corporation
- Frost & Sullivan
- Genpact
- International Business Machines Corporation (IBM)
- TekRevol
- Other Prominent Players
- Europe
- Adecco Group AG (Akkodis)
- ALTEN
- Applus+ IDIADA
- ARRK Product Development Group Ltd
- Arobs
- ASAP Holding GmbH
- AVL List GmbH (AVL)
- Bertrandt AG
- Capgemini Engineering
- Concise Software
- EDAG Group
- ESI Group
- Ester Digital
- HQSoftware
- IAV GmbH
- Intersog
- Kistler Group
- Lemberg Solutions
- Magna Steyr GmbH & Co KG
- Promwad
- SEGULA Technologies Group
- TietoEVRY
- TÜV SÜD
- Other Prominent Players
- Asia Pacific (India)
- Cyient
- HCL Technologies
- Infosys Limited
- KPIT Technologies
- L&T Technology Services (LTTS)
- Sasken Technologies Limited
- Tata Technologies Limited
- Tech Mahindra
- Wipro Limited
- Other Prominent Players
Key Segmentation:
By Service Type
- Design and Engineering
- Concept and detailed design
- CAD modeling and drafting
- Design optimization
- Ergonomics and aesthetics
- Prototyping
- Rapid prototyping
- 3D printing
- Virtual prototyping
- Functional and aesthetic prototypes
- Manufacturing Engineering
- Process planning and optimization
- Tooling and fixture design
- Assembly line design
- Quality control and assurance
- Software Development
- Embedded software development
- Automotive application development
- ADAS (Advanced Driver Assistance Systems) software
- Infotainment system software
- Testing and Validation
- Component and system testing
- Durability and reliability testing
- NVH (Noise, Vibration, and Harshness) testing
- Crash and safety testing
- System Integration
- Integration of mechanical, electrical, and software systems
- Vehicle system architecture design
- Integration of new technologies (e.g., electric and autonomous vehicles)
- Consulting Services
- Market analysis and strategy consulting
- Regulatory compliance consulting
- Sustainability and environmental impact consulting
By Location
- On-Site
- Onshore
- Offshore
By Pricing Model
- Staff Augmentation (FTE based)
- Time and Materia
- Fixed Price Projects
- Services
- Risk/Rewards
By Application
- Powertrain Components
- Engines
- Transmission
- Exhaust Systems
- Others
- Chassis and Suspension Systems
- Suspension Components
- Steering Systems
- Brakes
- Others
- Body and Exterior Components
- Body Panels
- Lights
- Aerodynamics
- Others
- Electronics and Connectivity
- Infotainment Systems
- ADAS Systems
- Vehicle Connectivity
- Others
- Other Applications
By Vehicle Type
- Commercial Vehicle
- Off-Highway Vehicle
- Passenger Vehicle
By Propulsion Type
- Internal Combustion Engine
- Electric Engine
By End User
- Original Equipment Manufacturers (OEMs)
- Tier 1 Suppliers
- Aftermarket Service Providers
By Region
- North America
- Europe
- Asia Pacific
- Middle East & Africa (MEA)
- South America
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