Automotive Engineering Services Outsourcing Market Size - By Services (Design and Engineering, Prototyping, Testing and Validation, Manufacturing Engineering), By Application, By Location, By End-User & Forecast, 2024 – 2032

Automotive Engineering Services Outsourcing Market Size

Automotive Engineering Services Outsourcing Market size was valued at USD 59.1 billion in 2023 and is estimated to register a CAGR of 6% between 2024 and 2032. The rapid pace of technological innovation in the automotive industry, particularly in areas such as autonomous driving, connected cars, and advanced safety systems, alongside the expansion of electric vehicle fleets, is a significant driver. Automotive companies often seek specialized expertise and capabilities that external engineering service providers can offer to stay competitive and keep up with these advancements.
 

In addition, governments worldwide have launched various initiatives to encourage consumers to prefer electric vehicles over fuel-powered automobiles. For instance, the California ZEV program intends to have 1.5 million zero-emission vehicles on the road, promoting the adoption of electric vehicles, thus stimulating the automotive engineering services outsourcing industry growth.
 

Quality control and compliance issues, alongside data security and intellectual property concerns, pose significant challenges to the outsourcing of engineering services. Ensuring adherence to standards and protecting sensitive information becomes complex when services are handled externally. These risks can affect market dynamics, as companies may hesitate to outsource critical engineering tasks, fearing potential breaches and loss of proprietary data. This apprehension could lead to increased scrutiny of outsourcing partners and potentially higher costs to ensure robust security measures and compliance, impacting the long-term growth and efficiency of the market.
 

Automotive Engineering Services Outsourcing Market Trends

Growing adoption of autonomous vehicle technologies will be a prominent trend in the automotive ESO industry. From January 2023 to November 2023, Waymo, an American autonomous driving technology firm, reported that the company served more than 700,000 ride-hailing trips with public riders and no human driver.
 

The development of autonomous vehicles continues to drive demand for engineering projects focused on sensor integration, software development for sensing and decision-making, vehicle-to-anything (V2X) communication systems, and verification and testing of autonomous driving, thus favoring market growth.
 

Automotive Engineering Services Outsourcing Market Analysis

Based on location, the market is categorized into onshore and offshore. The onshore segment expected to exceed USD 53 billion by 2032. Onshore outsourcing for automotive engineering projects allows for closer collaboration and communication between client and service provider, resulting in better alignment of goals and faster decision-making. Besides, local outsourcing provides an advantage in intellectual property protection. Onshore outsourcing often provides access to a pool of highly skilled technical expertise, advanced services, and industry standards that have been established, which can lead to higher quality products and efficiencies in the execution of the project.
 

Based on services, the automotive engineering services outsourcing market is divided into design and engineering, prototyping, testing and validation, manufacturing engineering. The prototyping segment held a market share of over 29% in 2023. As automotive companies race to innovate and bring new products to market faster, prototyping plays a crucial role in the early development process in validating systems, testing functionality, and identifying potential problems. This requirement is a growing need to have modeling skills. It reflects the industry’s emphasis on agility, innovation, and quality assurance to meet customer expectations and evolving regulatory standards.
 

Asia Pacific dominated the global automotive engineering services outsourcing market with a major share of 33% in 2023. Asia Pacific has an abundance of highly skilled engineers, offering cost-effective solutions without compromising quality. Furthermore, the industry’s strong focus on technological innovation and adoption makes it an incredible center for automotive research and development. In addition, good government policies, investments, and infrastructure development policies continue to support the growth of engineering outsourcing in the automotive technology sector. These factors make Asia Pacific a notable destination for automotive companies seeking to use outsourcing for competitive advantage and market expansion.
 

U.S. is expected to experience significant growth in the automotive ESO market due to its leadership in automotive innovation and technology. The increasing focus on electric vehicles, autonomous driving, and smart mobility solutions drives demand for specialized engineering services.
 

Europe automotive engineering services outsourcing (ESO) market is expected to grow significantly due to increased demand for electric vehicles and advancements in autonomous driving technologies. Key regions driving this growth include Germany, France, and the UK, which are leading in automotive innovation and development. These countries are investing heavily in R&D, focusing on sustainability, and complying with stringent emission regulations.
 

Automotive Engineering Services Outsourcing Market Share

AKKA Technologies, AVL, and FEV dominate automotive engineering service outsourcing (ESO) industry holding market share over 10%. They focus on strong partnerships and collaborations with automotive manufacturers, suppliers, and technology providers to expand their service offerings geographically. These companies invest heavily in R&D to pioneer emerging technologies such as electric vehicles, autonomous driving, and third-party connected vehicle solutions.
 

In addition, companies use mergers and acquisitions to develop complementary capabilities and expand their markets. Finally, an emphasis is placed on customer centricity by providing customized solutions, fostering long-term relationships, and providing excellent customer service to maintain availability and a competitive edge. Together, these strategies enable players in the automotive ESO industry to strengthen their positions and foster sustainable growth.
 

Automotive Engineering Services Outsourcing Market Companies

Major players operating in the automotive engineering services outsourcing industry are:

• AKKA Technologies
• Altair Engineering Inc.
• Alten Group
• Altran Technologies
• ARRK Product Development Group
• ASAP Holding GmbH
• AVL List GmbH
• Bertrandt AG
• Capgemini SE
   

Automotive Engineering Services Outsourcing Industry News

• In March 2023, Jaguar Land Rover partnered with Tata Technologies to accelerate the digital transformation of its technology business. This collaboration enables Jaguar Land Rover to enhance the delivery speed and experience of its modern luxury vehicles using state-of-the-art digital technology provided by Tata Technologies.
   
• In January 2023, Capgemini acquired sustainable, secure, and integrated solutions featuring software development and manufacturing expertise in the autonomous, connected, energy, and car-sharing segments and was recognized as the leader by the Everest Group ACES Automotive Engineering Services PEAK Matrix Assessment and received the highest rating for "Vision and Capability".
   

The automotive engineering services outsourcing market research report includes in-depth coverage of the industry with estimates & forecasts in terms of revenue (USD Million) from 2021 to 2032, for the following segments:

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Market, By Services

• Design and engineering
• Prototyping
• Testing and validation
• Manufacturing engineering
• Others

Market, By Application

• Body and exterior
• Powertrain and drivetrain
• Infotainment and telematics
• ADAS and autonomous driving
• Other

Market, By Location

• Onshore outsourcing
• Offshore outsourcing

Market, By End-user

• OEMs
• Tier 1, Tier 2 and Tier 3 Suppliers
• Aftermarket companies

The above information is provided for the following regions and countries:

• North America
  • U.S.
  • Canada
• Europe
  • UK
  • Germany
  • France
  • Italy
  • Spain
  • Rest of Europe
• Asia Pacific
  • China
  • India
  • Japan
  • South Korea
  • ANZ
  • Rest of Asia Pacific
• Latin America
  • Brazil
  • Mexico
  • Argentina
  • Rest of Latin America
• MEA
  • South Africa
  • UAE
  • Saudi Arabia
  • Rest of MEA