What Has Been the Growth of the Engineering Research And Development (ER&D) Outsourcing Market So Far?
The engineering research and development (er&d) outsourcing market has seen considerable growth due to a variety of factors.
• In the past years, the engineering research and development (ER&D) outsourcing market has seen significant expansion. The market size is projected to escalate from $535.22 billion in 2024 to $663.34 billion in 2025, representing a compound annual growth rate (CAGR) of 23.9%.
Various factors like the necessity for unique skills and proficiency, rise in global integration, the emergence of new ventures, the growth of multi-national companies, and changes in global economic scenarios have contributed to the historic period's growth.
What Will Be The Engineering Research And Development (ER&D) Outsourcing Market Size In The Future?
The engineering research and development (er&d) outsourcing market is expected to maintain its strong growth trajectory in upcoming years.
• The size of the engineering research and development (ER&D) outsourcing market is anticipated to witness a tremendous rise in the forthcoming years, with a projection to reach $1620.95 billion in 2029 at a compound annual growth rate (CAGR) of 25.0%.
The predicted uplift during the forecast phase is primarily due to global skill deficiencies, augmented regulatory intricacy, the demand for adaptability, a mounting focus on sustainability, along with the growing acceptance of 5G. The forecast period is set to experience major trends such as incorporation of artificial intelligence (AI) and machine learning (ML), expansion of IoT technologies, application of augmented reality (AR) and virtual reality (VR), and increased use of remote collaboration tools.
Which Drivers Are Accelerating Growth In The Engineering Research And Development (ER&D) Outsourcing Market?
The growth of the engineering research and development (ER&D) outsourcing market is predicted to be fueled by increasing outsourcing demand. The term outsourcing refers to the act of assigning a research project to a development firm that excels in advanced technology and employs knowledgeable engineers skilled in establishing profitable outsourcing alliances. By outsourcing engineering services, companies can decrease operating costs and the expenses linked to additional office space, labor, infrastructure, and operations. For example, NASSCOM, an Indian National Association of Software and Service Companies, projects that global spending on engineering R&D (ER&D) will surpass the $1.5 trillion threshold by 2025-2026, with $200 billion coming from outsourced services. As a result, the escalating demand for outsourcing is propelling the expansion of the engineering research and development (ER&D) outsourcing market.
What are the Market Segments in the Engineering Research And Development (ER&D) Outsourcing Market?
The engineering research and development (ER&D) outsourcing market covered in this report is segmented –
1) By Type: Mechanic, Embedded IT, Software
2) By Location: Onsite, Offshore
3) By End User: Automotive, Consumer Electronics, Telecom, Heavy Machinery, Semiconductor, Computing System, Aerospace, Energy, Medical Devices, Other End Users
Subsegments:
1) By Mechanical: Product Design And Development, Prototyping And Testing, Manufacturing Process Engineering, Structural Analysis and Simulation
2) By Embedded IT: Firmware Development, Hardware Design And Integration, Internet Of Things (IoT) Solutions, Real-Time Operating Systems (RTOS) Development
3) By Software: Application Development, Software Testing And Quality Assurance, Cloud-Based Solutions, Cybersecurity Solutions
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What Trends are Shaping the Engineering Research And Development (ER&D) Outsourcing Market?
The shortage of highly trained professionals is poised to augment the expansion of the engineering research and development outsourcing market. Such professionals are individuals who bring unique skills, education, and training to their roles. They are usually educated in colleges, universities, or trade schools. A dearth of such professionals in various manufacturing and IT companies has led them to outsource their technical tasks to other firms, a trend that could be reduced by initiating in-house training schemes. For instance, the Centre for Monitoring Indian Economy, a governmental organisation from India, reported in March 2022 that the number of skilled workers in India fell by 3.8 million during 2022. Furthermore, employment shrunk by 1.4 million to just 396 million in 2022. This reduction led to a 36.7% drop in the employment rate for the year 2022. In addition, Fortune, a U.S.-based digital news outlet, predicted in 2022 that by 2030, a global skill shortage would leave 85 million job positions vacant, causing an approximate annual revenue loss of $8.5 trillion. Consequently, the scarcity of skilled workforce is fueling the progress of the engineering research and development outsourcing market.
Who Are the Key Players in the Engineering Research And Development (ER&D) Outsourcing Market?
Major companies operating in the engineering research and development (ER&D) outsourcing market include:
• Accenture plc
• International Business Machines Corporation
• Tata Consultancy Services Limited
• Capgemini SE
• Cognizant Technology Solutions Corporation
• DXC Technology Company
• Harman International Industries
• Wipro LTD.
• Tech Mahindra Limited
• EPAM Systems lnc.
• Alten Group
• HCL Technologies Limited
• Altran Technologies SA
• Horiba Ltd.
• Akka Technologies Group
• Mindtree Limited
• Bertrandt AG
• L&T Technology Services Limited
• GlobalLogic Inc.
• IAV Gmbh
• Cyient Limited
• Tata Technologies Limited
• Assystem
• Kistler Group
• KPIT Technologies Limited
• FEV Europe GmbH
• Infosys Limited
• QuEST Global Services Pte. Ltd.
• Luxoft lnc.
• Wabtec Corporation
• Siemens AG
• Robert Bosch GmbH
• ABB Ltd.
• Honeywell International Inc.
• NEC Corporation
What are the Regional Insights into the Engineering Research And Development (ER&D) Outsourcing Market?
Asia-Pacific was the largest region in the engineering research and development outsourcing market in 2024. The regions covered in the engineering research and development (er&d) outsourcing market report are Asia-Pacific, Western Europe, Eastern Europe, North America, South America, Middle East, Africa.
