Robust Growth for Engineering Services Outsourcing: Spend Shifts to Emerging Markets; Captives Reassessed

The Engineering Services Outsourcing (ESO) market has witnessed substantial growth in recent decades, and has evolved to encompass a broad range of new product development, value-engineering and engineering consulting functions. At a global level, ESO spend is shifting proportionally from mature to emerging markets, primarily to India. Captive operations have also grown significantly in India and China. Both trends reflect underlying dynamics of the global sourcing market.

Today’s businesses, driven by cost reduction and product lifecycle pressures, are increasingly focused on developing effective outsourcing strategies that drive significant improvement in global engineering and R&D operations. Clients assessing their options require a clear understanding of existing environments in the context of industry standards, as well as a view into the risks and benefits of alternative change scenarios.

This ISG white paper examines market trends and factors contributing to the continued rapid growth of ESO. The author focuses on key success factors for clients and service providers seeking to evolve their relationships to maximize value from ESO initiatives.