Who Can Benefit from Engineering Process Outsourcing?

Global engineering process outsourcing (EPO) is growing rapidly, with companies working with service providers in attractive markets like the Philippines. Businesses and engineering professionals in various industries are feeling the pressure to bring better quality products to market faster while keeping costs down. Service providers are helping organizations achieve these goals and address challenges unique to each industry.

Industries that can benefit from engineering process outsourcing are as follows:

Automotive Industry

The global automotive engineering outsourcing market is expected to grow from $11.02 billion in 2021 to $11.78 billion in 2022 at a compound annual growth rate (CAGR) of 6.8%. Both established and new companies in the auto industry benefit from third parties that offer design and other services to support new products such as electric cars and electronic parts.

The outsourcing of engineering services in this sector helps companies gain about 20 to 50 percent cost savings while improving quality. Because responsibilities are well-defined and communication is clearer between individuals, team members are better focused on the task at hand. Lower rates associated with offshore services can also help expand the number of products that a supplier or manufacturer can make.

Consumer Electronics

The market can’t keep up with the rapid introduction of new devices and products. As a result, companies in the consumer electronics sector try to stand out by innovating and creating “smart” products. Similarly, service providers shorten the product lifecycle and use the necessary technology and expertise to help companies achieve competitive advantage.

Speed of deployment is one of the top reasons consumer electronics firms outsource engineering services. A service provider can provide expertise as needed, including senior-level talent and executive roles, without the need of going through a lengthy recruitment process. Engineering services outsourcing in the consumer electronics segment can also facilitate the transfer of core knowledge to new staff.

Oil and Gas

The discovery and exploration of large oil and gas fields worldwide have led to an increase in outsourced engineering services. These service include:

  • Rig design and support
  • Refinery design
  • Engineering integration
  • Program management
  • On-site and offsite training
  • Technical documentation

These outsourced services help oil refineries, petrochemical plants, gas processing plants  reduce costs and improve process efficiency.

Utilities Industry

Engineering services outsourcing is also gaining traction in the utilities sector. Instead of building in-house engineering capabilities, utilities companies work with vendors to access skilled labor and advanced technology such as smart grid design and support.

Construction, Industrial and Civil Engineering

Companies in the construction industry outsource engineering services to access offshore talent, reduce costs, and accelerate time to market.

Engineering services in this sector encompass everything from planning to the actual construction of residential and commercial buildings, environmental infrastructure, transport infrastructure, and water distribution channels. Engineering service providers also offer their expertise in design, project management, and product lifecycle management (PLM). These services reduce costs for construction companies, independent contractors, and building owners.

Engineering Professionals

The advancement in technology has raised the demand for engineering professionals. As such, many companies struggle to fill key engineering positions. Service providers around the world are filling the talent gap by sourcing skilled people from different locations. Locations like Eastern Europe, Mexico, the Philippines, and Vietnam are increasingly being tapped for talent as demand for highly-skilled engineers continues to grow.

Engineering outsourcing has helped STEM professionals get better jobs, training and experience at international firms. Such are:

  • Software engineers
  • Architects
  • Structural engineers
  • Landscape architects
  • Mechanical engineers
  • Electrical engineers
  • Interior designers
  • Environmental engineers
  • Civil engineers
  • General contractors
  • Subcontractors
  • Quantity surveyors

Outsourcing companies have provided engineering job opportunities which has thereby improved the economy in countries such as the Philippines and India.

Small and Midsize Businesses

Small and midsize businesses (SMBs) are leveraging outsourced engineering services to compete with well-established companies. Product and research development are commonly outsourced because it often takes significant financial investment as well as time and effort to put together development teams that will bring a product to market. All this can reduce the flexibility of startups and organizations that are expanding into a new market.

Some service providers specialize in providing Research and development (R&D) services to SMBs in specific sub-segments, like the machine-to-machine (M2M) market. Outsourcing delivery models are often flexible and suited to the changing needs of SMBs and companies working with tight budgets and deadlines. For example, the vendor may only charge for the actual hours of work. Flexible pricing plans from engineering outsourcing vendors help small businesses break even in only a few months instead of many years.

Large Enterprises

Large organizations that have the resources to develop and test products in-house may opt to outsource some engineering processes to gain a competitive advantage while reducing costs. Most large businesses have captive centers in multiple offshore locations, but they continue to work with third parties to access highly skilled, but less expensive resources. Large companies are more likely to adopt end-to-end engineering process outsourcing engagements. In these partnerships, the service provider is responsible for the entire engineering process, from design and prototyping to manufacturing in some cases.

The Rise of Engineering Process Outsourcing: Changes and Trends

The fast-growing engineering outsourcing market is being driven by many disruptive changes. The rise of intelligent products, the convergence of third-platform technologies, and faster speed-to-market are fueling its growth and pushing companies to seek partnerships with engineering process outsourcing providers. Significant market growth is expected as EPO is expected to help improve process efficiencies and give organizations the cutting-edge they seek.

Intelligent Products

We are currently in the age of intelligent products and services. Companies are investing heavily in R&D due to the demand for embedded electronics and software, which are needed to create “smart” devices.

Smart devices are popular because they give firms a competitive edge. To keep up with demand, EPO providers are extending capabilities in terms of R&D and embedded software development. Some of the industries that are increasing their use of outsourced engineering services include high-tech, consumer electronics/software and automotive.

Third Platform Technologies

Intelligent products generate large amounts of data that provide valuable insights to both consumers and manufacturers. Social media, analytics and the cloud are just a few examples. EPO providers analyze the data derived from these technologies to provide valuable insight to their clients.

Faster Speed to Market

Most companies outsource engineering services because of the faster speed to market. Today’s products come to market at a breakneck pace, increasing the demand for EPO services. New products in turn make old systems obsolete, fueling the outsourcing of engineering services to support legacy systems. Changing customer behavior has also forced companies to innovate faster and develop new products.

Pressure to Reduce Costs

Cost reduction remains a major driver of EPO growth. Companies realize that they can improve and extend internal capabilities by working with outside specialists. Outsourced engineering allows organizations to maximize their resources and divert them to more critical and strategic tasks.

Needs of Emerging Economies

Companies in emerging economies have their own unique product development needs, and EPO providers are stepping up to provide flexible and frugal engineering solutions. Both developed and emerging countries are increasingly outsourcing engineering services to access skilled engineering talent, access innovative technologies and processes, take advantage of investment-oriented political climates, and reduce costs. Many companies prefer to outsource engineering services within the same country or region for better regulatory compliance.

Needs of Various Industries

Industries that outsource specific engineering tasks are:

  • Telecommunication
  • Consumer electronics
  • Automotive
  • Pharmaceuticals
  • Semiconductors
  • Construction
  • Aerospace

The global aerospace engineering services outsourcing market size was valued at USD 37.79 billion in 2018 and is expected to show a CAGR of 25.9% from the years 2019 to 2025. Third parties provide aerospace companies with avionics, aero engine designs, aero systems and interiors, aero structures designs, and manufacturing services.

Engineering outsourcing in the consumer electronics sector will continue to grow as it provides a reduced risk associated with capital investment in manufacturing facilities. Fast growing electronics manufacturers, such as Sun Microsystems, Cisco, Apple, Sony-Ericsson, Palm and Nokia started outsourcing their operations early on.

Demand will also increase in the pharmaceutical sector for outsourced services like prototyping, value analysis, and preclinical testing. Meanwhile, telecoms firms continue to depend on engineering service providers for business support systems, infrastructure, and back-end expertise. Specific services include geographic information systems (GIS) systems, cloud engineering services, network testing, design and implementation, and product lifecycle management (PLM).

To learn more about outsourcing, you can read our Top 8 Qualities of an Outsourcing Company in the Philippines article. We invite you to follow us on social media and to visit our website to learn more about our services.

About Us: Sourcefit is a widely recognized US-managed business process outsourcing company based in Manila, Philippines. We proudly serve over 100 clients with a workforce of more than 1,300 employees. Our global centers can serve multiple markets, and our staff is highly proficient in English, Spanish, French, and Portuguese. Whether you need a few or many employees, we can help you achieve your business goals and build high-quality offshore teams.

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Sourcefit’s commitment to excellence has been recognized through numerous industry awards and certifications.

We recently received the Fortress Cyber Security Award from the Business Intelligence Group. Sourcefit was also honored with the prestigious recognition of Best Outsourcing Solutions Provider in the Philippines during the 2023 Business Excellence Awards.

Other awards include: FT ranking of 500 high-growth Asia-Pacific, The Marketing Excellence Awards, Inquirer Growth ChampionHR Asia Awards, among others.

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