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Top 4 Emerging Trends Impacting the Global Engineering Services Outsourcing Market from 2016-2020: Technavio

LONDON–(BUSINESS WIRE)–Technavio’s latest report on the global
engineering services outsourcing (ESO) market
provides an
analysis on the most important trends expected to impact the market
outlook from 2016-2020. Technavio
defines an emerging trend as a factor that has the potential to
significantly impact the market and contribute to its growth or decline.

Organizations outsource several business processes to service
providers to provide more focus on core business offerings. Outsourcing
brings down costs and innovation in product development. The services
can be availed for various phases of product development process.
Outsourcing can be key to organizations operating in industry verticals
like automotive. It helps industries keep up with the rapidly changing
technological landscape.

The outsourcing decisions in organizations are very strategic in nature.
Project managers mainly opt to outsource engineering services such as 3D
modeling
and computer-aided design (CAD). Digitization has
triggered organizations to demand for advanced IT solutions such as
engineering analytics, internet
of things (IoT)
, and artificial intelligence (AI) to gain
an edge over their competitors and maintain the momentum of the company.

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The top four emerging trends driving the global engineering services
outsourcing according to Technavio information
and communications technology
research analysts are:

  • Emergence of artificial intelligence and machine learning
  • Evolution of industrial IoT
  • Growing trend of engaging clients with consulting services
  • Nearshoring and growing captive operations in emerging countries

Emergence of artificial intelligence (AI) and machine learning

Automation
in engineering services has triggered the usage of artificial
intelligence technology. AI-powered engineering solutions help to
resolve various stages of design and development of engineering
products. Automation in engineering services helps an organization to
reduce cost by 35%-45%. Leading vendors in the market have invested in
the development of engineering services powered by artificial
intelligence technologies,
” says Amit Sharma, one of the lead
analysts at Technavio for IT
professional services
research.

Machine learning, which is a part of AI systems, is recognized in the
engineering services industry. Machine learning solutions integrated
with analytical tools are transforming the industrial manufacturers’
decision-making pathways. These solutions are also being developed by
leading cloud computing firms such as Amazon Web Services and Microsoft.

Evolution of industrial IoT

Penetration of industrial IoT in several industry verticals has
increased significantly. Smart connected devices are aiding
manufacturers to enable M2M
communications
. Industrial IoT services provide real-time
information exchange to help industrial manufacturers to design and
develop products. The industrial IoT services for ERD opt to bring
innovation in engineered products.

Leading automotive companies such as GM, Nissan, and BMW
are investing in building next generation autonomous cars. GM has
invested USD 500 million in Lyft, a ride-sharing firm, to provide
on-demand autonomous vehicles. Autonomous cars are designed and tested
with the help of IoT technologies.

Growing trend of engaging clients with consulting services

Leading IT vendors are entering the consulting space to engage with
customers as a part of building strategic relationships. Engineering
Service Outsourcing vendors require smart talent management and a
comprehensive understanding of the client’s business. This will aid them
to move to higher value consulting and establish long-term engagements
,”
says Amit.

In line with the growing adoption of technology and associated
engineering services, engineering outsourcing services (ESO) vendors
need to offer high-end consulting services. This also helps clients gain
expertise in technology and engineering to an extent. Consulting
services are advisory services that help companies analyze and improve
business operational performance and technology strategies. With
increased adoption of social networking, mobile computing, online
collaboration, cloud computing, and data storage, there is also an
increased need for consulting services to manage the large complex
networks.

Nearshoring and growing captive operations in emerging countries

Currently, India is the most preferred location for ESO because of the
highly skilled labor force and cost advantages. The Indian service
providers win contracts from western countries including the US, the UK,
and Germany because these reasons. This is leading to a significant
growth in number of multi-national companies (MNCs) in India. The trend
of MNCs setting up their own operational centers despite their high
costs is on the rise. This makes them across as centers of excellence
and the creators of high-end employment opportunities as opposed to the
cost-arbitrage model of the past. The idea behind setting up captive
centers is to put the diverse talent pool of India to good use, retain
key data and information within the company, and propagate RD
activities through partners.

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About Technavio

Technavio
is a leading global technology research and advisory company. The
company develops over 2000 pieces of research every year, covering more
than 500 technologies across 80 countries. Technavio has about 300
analysts globally who specialize in customized consulting and business
research assignments across the latest leading edge technologies.

Technavio analysts employ primary as well as secondary research
techniques to ascertain the size and vendor landscape in a range of
markets. Analysts obtain information using a combination of bottom-up
and top-down approaches, besides using in-house market modeling tools
and proprietary databases. They corroborate this data with the data
obtained from various market participants and stakeholders across the
value chain, including vendors, service providers, distributors,
re-sellers, and end-users.

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Article source: http://www.businesswire.com/news/home/20161205005440/en/Top-4-Emerging-Trends-Impacting-Global-Engineering

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