Shibuya-ku, Tokyo, Japan, Japan, Jun 06, 2022, 12:28 /Comserve / -- Automotive Engineering Services Outsourcing Market With Top Countries Data, Industry Analysis , Size, Share, Revenue, Prominent Players, Developing Technologies, Tendencies and Forecast

Automotive Engineering Services Outsourcing Market was valued at 76 billion in 2020 and is projected to reach USD 253.9 billion by 2026, registering a CAGR of 27.5%

The COVID-19 outbreak has affected many industries across the world. Many countries imposed a complete lockdown for few months because of the COVID-19 pandemic, which hampered the production of vehicles. Vehicle sales took a hit as manufacturing sites throughout the world were shut down. The impact of the pandemic was moderate on the automotive engineering services market. However, most automakers have resumed vehicle manufacturing with limited capacity and the safety measures in place. The market is expected to grow positively during the forecast period as economies are slowly recovering in the post-pandemic period.

The market is expected to be driven by the growing technological skills of Engineering Service Providers (ESPs) to offer R&D and product innovation in their products and solutions, OEM and government concentration on electric vehicles, innovative technologies with respect to vehicle and passenger safety, and lightweight vehicles etc.

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However, the market faces challenges from restraining factors like high cost of engineering services and technological limitations which can affect market growth.

Key Market Trends

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

Engineering services outsourcing (ESO) is the practice of hiring non-physical engineering functions from an external source, such as design, prototyping, system integration, and testing. These services are needed from the start of the product design and development process and making use of a variety of IT-based tools and databases.

To keep up with consumer demand, automobile manufacturers have realized that they need to improve their engineering capabilities and innovation. Several governments are supporting automakers by offering incentives and tax cuts in exchange for producing automobiles that fully adhere to standards.

In order to follow the standards from conception to production, companies are outsourcing their projects for better output and also for time-saving. Outsourcing can help with a range of tasks, including creating parts, dealing with a company's supply chain, and developing engineering aftermarket assistance. Information technology can also aid in the speed and cost-effectiveness of product development.

Outsourcing assists businesses in integrating product development with related operations like engineering and warranty management. Outsourcing also gives businesses access to skilled workers who are familiar with local trends. Products that are adapted to the needs of local markets might give businesses a competitive advantage in terms of expanding their market share in the target areas.

India is Expected to Dominate the Asia-Pacific Region

Large automotive OEMs are outsourcing production and related activities to countries like India, and China due to the availability of low-cost labor. As a result, ESO providers for the automobile industry are refocusing their efforts ESO providers for the automobile industry are shifting their bases to the APAC area.

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Among the low-cost countries, India accounts for roughly 30% of all available engineering service outsourcing (ESO) and business process outsourcing (BPO) manpower. In comparison to European, Latin American, and North American countries, India offers a 15-26 percent cost advantage. For global OEMs catering to the needs of various segments around the world, India has provided a strongly competitive market. Kia and MG are two recent OEMs to enter the Indian market. Because of the strict emission regulations in place all over the world,

The automotive engineering services market is estimated to employ around 50,000 full-time equivalents (FTEs) in India's Global In-House Centers (GICs). Apart from GICs, there is a slew of additional Indian automotive service providers, as well as traditional BP/IT service firms, that offer automotive engineering services.

India is running programs like FAME, Automotive Mission Plan, and NATRIP, to boost the manufacturing, infrastructure developments, and adoption of electric vehicles. BYD has set up a manufacturing unit in collaboration with Olectra to produce electric buses in India and is looking forward to setting up second unit. Make in India program allows 100% FDI in the automobile sector without government approval, and Central and State governments provide various incentives and subsidies to boost manufacturing.

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.

In this group of regional markets, China will continue to be one of the fastest expanding. The Asia-Pacific market is expected to register positive CAGR led by countries like Australia, India, and South Korea.

Competitive Landscape

The automobile sector is witnessing collaborations, acquisitions, and partnerships throughout the globe. To keep up with the growing customer demand for connected vehicles, increased autonomy, and electrifications, OEMs are partnering with industry experts and leaders in IT and battery manufacturing. OEMs are producing white label vehicles for technology companies to install the latest features and technology that will make the vehicle suitable for the present need of customers. For instance,


In September 2020, Bertrandt has signed a cooperation agreement with Bozzio AG, one of the leading manufacturers of drive-by-wire systems. This cooperation will help to successfully advance the development of autonomous systems. Bertrandt and Bozzio will provide support for their customers from the initial concept to the final implementation, with the aim of decisively influencing vehicle development in the future.
In April 2020, Capgemini had announced its plan to acquire Paris-based engineering consulting firm Altran Technologies for USD 4.1 billion. The acquisition is expected to offer Capgemini with full stack of capabilities across research and development (R&D) strategy, digital design, product engineering, manufacturing services, software development and integration.


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

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