Automotive Engineering Services Outsourcing Market Size, Share & Trends Report

Automotive Engineering Services Outsourcing Market Size, Share & Trends Analysis Report By Application, By Service (Designing, Prototyping), By Location (On-shore, Off-shore), And Segment Forecasts, 2023 - 2030

  • Report ID: GVR-2-68038-635-6
  • Number of Pages: 300
  • Format: Electronic (PDF)
  • Historical Range: 2018 - 2021
  • Industry: Technology

Market Segmentation

  • Automotive ESO Application Outlook (Revenue, USD Billion, 2018 - 2030)
    • Autonomous Driving/ADAS
    • Body & Chassis
    • Powertrain And After-Treatment
    • Infotainment & Connectivity
    • Others
  • Automotive ESO Service Outlook (Revenue, USD Billion, 2018 - 2030)
    • Designing
    • Prototyping
    • System Integration
    • Testing
    • Others
  • Automotive ESO Location Outlook (Revenue, USD Billion, 2018 - 2030)
    • On-shore
    • Off-shore
  • Automotive ESO Regional Outlook (Revenue, USD Billion, 2018 - 2030)
    • North America
      • North America automotive ESO market, by application
        • Autonomous Driving/ADAS
        • Body & Chassis
        • Powertrain And After-Treatment
        • Infotainment & Connectivity
        • Others
      • North America automotive ESO market, by service
        • Designing
        • Prototyping
        • System Integration
        • Testing
        • Others
      • North America automotive ESO market, by location
        • On-shore
        • Off-shore
      • U.S.
        • U.S. automotive ESO market, by application
          • Autonomous Driving/Adas
          • Body & Chassis
          • Powertrain And After-Treatment
          • Infotainment & Connectivity
          • Others
        • U.S. automotive ESO market, by service
          • Designing
          • Prototyping
          • System Integration
          • Testing
          • Others
        • U.S. automotive ESO market, by location
          • On-shore
          • Off-shore
      • Canada
        • Canada automotive ESO market, by application
          • Autonomous Driving/ADAS
          • Body & Chassis
          • Powertrain And After-Treatment
          • Infotainment & Connectivity
          • Others
        • Canada automotive ESO market, by service
          • Designing
          • Prototyping
          • System Integration
          • Testing
          • Others
        • Canada automotive ESO market, by location
          • On-shore
          • Off-shore
      • Mexico
        • Mexico automotive ESO market, by application
          • Autonomous Driving/ADAS
          • Body & Chassis
          • Powertrain And After-Treatment
          • Infotainment & Connectivity
          • Others
        • Mexico automotive ESO market, by service
          • Designing
          • Prototyping
          • System Integration
          • Testing
          • Others
        • Mexico automotive ESO market, by location
          • On-shore
          • Off-shore
    • Europe
      • Europe automotive ESO market, by application
        • Autonomous Driving/ADAS
        • Body & Chassis
        • Powertrain And After-Treatment
        • Infotainment & Connectivity
        • Others
      • Europe automotive ESO market, by service
        • Designing
        • Prototyping
        • System Integration
        • Testing
        • Others
      • Europe automotive ESO market, by location
        • On-shore
        • Off-shore
      • Germany
        • Germany automotive ESO market, by application
          • Autonomous Driving/ADAS
          • Body & Chassis
          • Powertrain And After-Treatment
          • Infotainment & Connectivity
          • Others
        • Germany automotive ESO market, by service
          • Designing
          • Prototyping
          • System Integration
          • Testing
          • Others
        • Germany automotive ESO market, by location
          • On-shore
          • Off-shore
      • France
        • France automotive ESO market, by application
          • Autonomous Driving/ADAS
          • Body & Chassis
          • Powertrain And After-Treatment
          • Infotainment & Connectivity
          • Others
        • France automotive ESO market, by service
          • Designing
          • Prototyping
          • System Integration
          • Testing
          • Others
        • France automotive ESO market, by location
          • On-shore
          • Off-shore
      • U.K.
        • U.K. automotive ESO market, by application
          • Autonomous Driving/ADAS
          • Body & Chassis
          • Powertrain And After-Treatment
          • Infotainment & Connectivity
          • Others
        • U.K. automotive ESO market, by service
          • Designing
          • Prototyping
          • System Integration
          • Testing
          • Others
        • U.K. automotive ESO market, by location
          • On-shore
          • Off-shore
    • Asia Pacific
      • Asia Pacific automotive ESO market, by application
        • Autonomous Driving/ADAS
        • Body & Chassis
        • Powertrain And After-Treatment
        • Infotainment & Connectivity
        • Others
      • Asia Pacific automotive ESO market, by service
        • Designing
        • Prototyping
        • System Integration
        • Testing
        • Others
      • Asia Pacific automotive ESO market, by location
        • On-shore
        • Off-shore
      • China
        • China automotive ESO market, by application
          • Autonomous Driving/ADAS
          • Body & Chassis
          • Powertrain And After-Treatment
          • Infotainment & Connectivity
          • Others
        • China automotive ESO market, by service
          • Designing
          • Prototyping
          • System Integration
          • Testing
          • Others
        • China automotive ESO market, by location
          • On-shore
          • Off-shore
      • India
        • India automotive ESO market, by application
          • Autonomous Driving/ADAS
          • Body & Chassis
          • Powertrain And After-Treatment
          • Infotainment & Connectivity
          • Others
        • India automotive ESO market, by service
          • Designing
          • Prototyping
          • System Integration
          • Testing
          • Others
        • India automotive ESO market, by location
          • On-shore
          • Off-shore
      • Japan
        • Japan automotive ESO market, by application
          • Autonomous Driving/ADAS
          • Body & Chassis
          • Powertrain And After-Treatment
          • Infotainment & Connectivity
          • Others
        • Japan automotive ESO market, by service
          • Designing
          • Prototyping
          • System Integration
          • Testing
          • Others
        • Japan automotive ESO market, by location
          • On-shore
          • Off-shore
    • South America
      • South America automotive ESO market, by application
        • Autonomous Driving/ADAS
        • Body & Chassis
        • Powertrain And After-Treatment
        • Infotainment & Connectivity
        • Others
      • South America automotive ESO market, by service
        • Designing
        • Prototyping
        • System Integration
        • Testing
        • Others
      • South America automotive ESO market, by location
        • On-shore
        • Off-shore
      • Brazil
        • Brazil automotive ESO market, by application
          • Autonomous Driving/ADAS
          • Body & Chassis
          • Powertrain And After-Treatment
          • Infotainment & Connectivity
          • Others
        • Brazil automotive ESO market, by service
          • Designing
          • Prototyping
          • System Integration
          • Testing
          • Others
        • Brazil automotive ESO market, by location
          • On-shore
          • Off-shore
    • MEA
      • MEA automotive ESO market, by application
        • Autonomous Driving/ADAS
        • Body & Chassis
        • Powertrain And After-Treatment
        • Infotainment & Connectivity
        • Others
      • MEA automotive ESO market, by service
        • Designing
        • Prototyping
        • System Integration
        • Testing
        • Others
      • MEA automotive ESO market, by location
        • On-shore
        • Off-shore

Automotive Engineering Services Outsourcing Market Dynamics

Driver: Increased Tie-Ups Between Automotive OEMs and ESO Providers

Automotive engineering services have advanced at a fast pace in the past few decades due to the rapid alignment of the OEMs with global megatrends such as the rise in emphasis on performance and fuel efficiency, safety, and self-driving abilities. Increased demand for safety standards and environmental sustainability adherence, innovation, and designing automobiles that cater to varied industrial segments with shorter time-to-market has gained importance. Due to the emerging trends, global automobile manufacturers are focused on collaborations and partnerships with firms emphasizing optimal engineering services. Conventionally, automotive innovation is driven by R&D activities by leading automakers and tier-one suppliers, with the largest OEMs making the most significant R&D investments. The contemporary model has witnessed an automotive evolution where OEMs lack the skill set, and it is not cost-efficient for OEMs to invest in technologies where they lack expertise.

This void is being significantly filled by major ESO providers who invest in emerging technologies such as connected cars, vehicle positioning and guidance systems, autonomous driving, and power batteries, among others. Since OEMs are expected to control a narrower portion of R&D, their technology partnerships with suppliers and automotive ESO providers are expected to increase.

Driver: Cost Effective Labor at Off-Shore Locations

Automotive companies are outsourcing their engineering services to developing countries to cut down on labor costs. Developing countries such as India, China, and the Philippines have profitable labor. The major automotive companies such as Daimler AG, BMW AG, Volkswagen AG, and Audi AG outsource their labor-intensive manufacturing to ESO vendors in the above-mentioned cost-effective countries.

The on-shore and off-shore engineering work of the companies depends on the nature of the work where they tend to outsource most of the designing and research & development services to the on-shore captive centers or ESO vendors. In contrast, the labor-intensive work where there is a requirement for skilled and unskilled workers is outsourced to their off-shore ESO vendors or captive manufacturing centers. There are various local ESO vendors associated with automotive companies for manufacturing automobile parts and components. These vendors offer engineering services at lower cost benefiting from cost-effective labor, to attract the automotive companies. Automotive Engineering Services Co. Ltd. (AES), a Japanese ESO vendor, collaborated with Samvardhana Motherson Group and formed a joint venture named as AES (India) Engineering Ltd. to benefit from the cost-effective labor in India. AES (India) Engineering Ltd. provides turnkey supply, project management, consultation, engineering, and other related services to the automotive industry. The company is headquartered in Noida, India, and its corporate offices are located in Pune, Ahmedabad, and Chennai. Further, HELLA India Automotive Pvt. Ltd. (HIA), an automotive engineering services provider based in India, operates as a HELLA GmbH & Co subsidiary.

Restraint: Building R&D Competence

Automotive companies such as Audi AG, Daimler AG, Toyota Motor Corporation, Volkswagen AG, BMW AG, and Ford Motor Corporation are focusing on R&D instead of outsourcing these services to ESO vendors. These companies choose to conduct in-house R&D activities with a specialized team of researchers to gain the first-mover advantage in case of the innovative technology developed and due to the unavailability of the skilled R & D team in the ESO companies. This is anticipated as a significant challenge to the ESO vendors.

In this case, the bargaining power is higher for the automotive companies with the in-house R&D team, and the ESO companies perform monotonous services, which can be switched to captive manufacturing by the automotive companies. For instance, Volkswagen AG has an in-house research team for its R&D activities; its research headquarters are located in Wolfsburg, Germany, for carrying out R&D activities for all Group brands. Moreover, the company filed around 6,465 patent applications worldwide for its employee inventions. Further, Tata Motors has its R&D centers and design studios located in India, Italy, the UK, and South Korea. The research team of Tata Motors carries out the designing and R&D in the automotive division and outsources the manufacturing and other engineering services to the ESO vendors.

Opportunity: Technological Breakthroughs in The Automotive Industry

The technological advancements in automobiles' conventional ecosystem have created growth opportunities for ESPS in the long run. This can be subjected to the increasing deployment of embedded software and upgrades in automobiles' electronic architectures. With the introduction of embedded systems, vehicles are no longer just a basic mode of travel as it is now equipped with infotainment and connectivity features. The technological breakthroughs in the industry with the incorporation of smart technology to offer a safe, simplified, and controlled driving experience are expected to significantly contribute to the automotive ESO growth over the forecast period.

Moreover, the embedded software services and their use cases have offered groundwork for personalized or automated travel on demand. The electronic architecture advancements have led to the modernization of steering, braking, infotainment, engine management systems, powertrain electrification, and various other convenience features. This has gauged the demand for electric and electronic engineering services, with system integration and subsystems outperforming in this space. However, the advent of these technological innovations has also resulted in the increased complexity of electrical and electronic architecture, including the Electronic Control Units (ECUs) and actuators and sensors' wiring.

What Does This Report Include?

This section will provide insights into the contents included in this automotive engineering services outsourcing market report and help gain clarity on the structure of the report to assist readers in navigating smoothly.

Automotive engineering services outsourcing market qualitative analysis

  • Industry overview

  • Industry trends

  • Market drivers and restraints

  • Market size

  • Growth prospects

  • Porter’s analysis

  • PESTEL analysis

  • Key market opportunities prioritized

  • Competitive landscape

    • Company overview

    • Financial performance

    • Product benchmarking

    • Latest strategic developments

Automotive engineering services outsourcing market quantitative analysis

  • Market size, estimates, and forecast from 2018 to 2030

  • Market estimates and forecast for product segments up to 2030

  • Regional market size and forecast for product segments up to 2030

  • Market estimates and forecast for application segments up to 2030

  • Regional market size and forecast for application segments up to 2030

  • Company financial performance

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