The Three Waves in the Evolution of the Engineering Services Outsourcing Industry

Engineering services outsourcing (ESO) has traditionally included services required at each stage of the product lifecycle, from conceptualization to retirement. Product design and development, which are core to the engineering function, have long leveraged Information Technology (IT) through tools and databases and through the automation of certain processes.

Today, engineers are integrating IT more tightly into the design of products so that technology envelopes and enables them. Instead of selling a kitchen appliance, for example, consumer durable manufacturers are selling appliances-as-a-service. The smart machine is engineered with built-in IT so that it connects to a smart platform for predicting, preventing and scheduling maintenance. And it is ESO providers that are taking the lead in the integration of engineering and IT in this new digital world.

At the present moment, we are in the second of three waves that mark the evolution of the ESO industry. While advancement in technology is really what drives change in this field, business and consumer expectations also push it forward. This ISG white paper explores the evolution of the engineering services outsourcing market and what it means for enterprise growth. The table below outlines the characteristics and real-world examples that define each wave.