The global engineering services outsourcing market size is expected to reach USD 5.50 trillion by 2028, according to a new report by Grand View Research, Inc. The market is anticipated to register a CAGR of 22.9% from 2021 to 2028. The globalization of Research and Development (R&D), easy availability of low-cost labor and skilled professionals, and increasing adoption of information technology and smart technologies in various end-use industries are some of the factors that are expected to drive the growth of the market for engineering services outsourcing (ESO) over the forecast period.
The market has been evolving continuously in line with the advances in sensing, connected computing, artificial intelligence, and the internet of things (IoT), among other technologies. The intensifying competition to provide state-of-the-art solutions is prompting service providers to invest aggressively in R&D. Key ESO players are also putting a strong emphasis on Mergers and Acquisitions (M&A) and strengthening the existing tie-ups with their clients to tap new business opportunities. For instance, in November 2020, Tata Consultancy Services Limited, global IT services, and business solutions provider based in India announced an agreement to acquire 100% of the shares of Postbank Systems AG, one of the prominent IT service providers based in Germany, from Deutsche Bank AG. Tata Consultancy Services Limited already happens to be Deutsche Bank AG’s trusted IT service partner and the acquisition would deepen the partnership further while allowing the company to strengthen its operations in Germany.
The outbreak of the COVID-19 pandemic and the subsequent lockdowns implemented in various countries across the world at the beginning of 2020 to arrest the spread of the disease had a varying impact on the ESO market depending on the end-use industry. For instance, industries and industry verticals, such as automotive, and aerospace, among others, were adversely affected owing to the temporary shutdown of industrial facilities, production units, public transportation, and logistics operations. On the contrary, the pharmaceutical and healthcare industry was relatively unaffected as healthcare companies focused on the development of advanced personal protective equipment (PPE) and testing kits, while pharmaceutical companies embarked upon the development of COVID-19 vaccines.
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