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Report Overview
The global engineering services outsourcing (ESO) market was valued at USD 908.75 Billion in 2025. The industry is expected to grow at a CAGR of 30.10% during the forecast period of 2026-2035 to reach a value of USD 12624.59 Billion by 2035. The increasing software definition of product architecture and complexity in engineering are pushing the OEMs from transactional outsourcing to strategic partnerships that entail design, development, validation, and lifecycle engineering.
The partnerships enable the OEMs to effectively manage R&D expenses, tap into specialized engineering expertise, and accelerate innovation, while maintaining limited headcounts in research and development. This was witnessed in June 2025 when Volvo Cars nominated HCLTech as a strategic engineering services partner, and one of their key tasks was to provide complete engineering services from their global delivery centers and Gothenburg Center of Excellence.
In another related move in the June 2025, HCLTech won a massive engineering services contract from Volvo Group also related to outsourced engineering solutions. Such initiatives from various OEMs are resulting in increasing adoption of ESO. The OEM-led initiatives are resulting in direct embeds of service providers in their product development and innovation pipelines.
2025
Base Year
2019-2025
Historical Period
2026-2035
Forecast Period
Compound Annual Growth Rate
30.1%
Value in USD Billion
2026-2035
*this image is indicative*
Key Trends and Recent Developments
Strategic Acquisitions to Enhance Engineering Expertise
Strategic acquisitions continue to be a major contributor to growth in the ESO market, with service vendors aiming to quickly increase their engineering strength and deepen their skill sets. Through strategic acquisitions, organizations can effectively meet the complex needs of their customers in the areas of Aerospace, Industry, and Healthcare. Evidence of this was seen in August 2025, with the announcement that Wipro had acquired the Digital Transformation Solutions business unit of Harman for USD 375 million, substantially enhancing their engineering R&D services strength.
Expansion of Offshore Engineering Delivery Centers
The rise of offshore engineering delivery centers is facilitating ESO service providers to offer scalable, cost-effective, and uninterrupted engineering services to overseas clients. Offshore facilities are also improving collaboration on product development and lifecycle management processes. In June 2025, L&T Technology Services teamed up with Tennant Company to set up an offshore engineering development center in India, which deals with new product development and engineering lifecycle services.
Targeted Acquisition to Build Specialized Engineering Expertise
The ESO service providers are now resorting to acquisitions of niche engineering companies to improve their strengths in high-growth areas like semiconductors, embedded systems, and advanced electronics. As a result of these acquisitions, companies are now able to meet the increasing demands of their clients for engineering services. In December 2025, Virtusa acquired Bengaluru-based SmartSoC Solutions, a company involved in semiconductor engineering and integrated circuit designs.
Acquisition-Led Expansion into Digital & AI Engineering
Engineering service providers are aggressively pursuing acquisition strategies to enhance their digital and AI-based engineering offerings as there is growing demand from the automotive, aerospace, and industrial sectors. The acquisition strategies delineate future investments in cutting-edge areas of engineering. In October 2025, Cyient hinted at making acquisitions to enhance its digital, AI, automotive, and defense engineering offerings.
Enhancing Engineering Capabilities via Majority Stake acquisitions
Major consulting and technology companies are increasingly acquiring majority interests in engineering consulting firms to improve end-to-end engineering service delivery, especially for infrastructure and data-driven projects. To cite an instance, in December 2025, Accenture announced that it acquired a 65 percent interest in United States consulting company DLB Associates.
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Global Engineering Services Outsourcing (ESO) Industry Segmentation
The EMR’s report titled “Global Engineering Services Outsourcing (ESO) Market Report and Forecast 2026-2035” offers a detailed analysis of the market based on the following segments:
Market Breakup by Application
- Aerospace
- Automotive
- Construction
- Consumer Electronics
- Semiconductors
- Pharmaceuticals
- Telecom
- Others
Key Insights: The ESO market caters to the aerospace, automotive, construction, consumer electronics, semiconductor, pharmaceuticals, telecom, and other industry segments owing to increasing engineering complexity. The aerospace and construction segments require complex design and simulation solutions, whereas automotive and telecom markets depend on embedded software and system engineering. Semiconductor and consumer electronics companies are increasingly outsourcing their tasks in semiconductor design and AI. ES-Tec Group in Germany was acquired in September 2024 by Tata Technologies to enhance their automotive and industrial engineering services, thus indicating increasing demands of ESO solutions in different segments.
Market Breakup by Location Type
- On-Shore
- Off-Shore
Key Insights: ESO delivery is provided on the basis of on-shore and off-shore models. On-shore delivery is always preferred when the projects are related to aerospace, the pharmaceutical sector, or the defense sector. Off-shore delivery is preferred when the projects are related to the automotive, semiconductor, telecom, and consumer electronics sectors. In September 2024, Rolls-Royce has further enhanced its Bengaluru Engineering Capability Hub, further strengthening the position of India as a global destination for off-shore engineering.
Market Breakup by Region
- North America
- Europe
- Asia Pacific
- Latin America
- Middle East and Africa
Key Insights: North America, Europe, Asia Pacific, Latin America, and Middle East & Africa offer distinct value to ESO. North America supports demand from OEM-driven R&D outsourcing. Europe relies on precision engineering and automotive innovation. The main delivery location remains Asia Pacific due to manpower availability in engineering. Virtusa's December 2024 acquisition of Asian Pacific company SmartSoC Solutions of Bengaluru marked semiconductor engineering expertise and reemphasized its significance in ESO.
Global Engineering Services Outsourcing (ESO) Market Share
By application, aerospace sector shows robust growth
The trend of outsourcing within the aerospace industry is growing as original equipment manufacturers (OEMs) and tier-1 manufacturers look for collaborators for complex engineering and system integration. Third-party engineering companies play integral roles in the R&D and embedded system processes that have become more challenging. For instance, in October 2025, TASE Global reported a USD 30 million expansion package that included the acquisition of Joined Alloys based in the state of Arizona and the brownfield investment at Chennai for enhancing aerospace components manufacture for clients such as Boeing, Airbus, and Honeywell.
Increasing complexity in the semiconductor industry and the demand for customized chip designs, packaging, and testing are fueling outsourcing in engineering, allowing fabless manufacturers and OEMs alike to innovate faster. In December of last year, Virtusa purchased Bengaluru-based SmartSoC Solutions, a boutique firm engaged in providing semiconductor engineering solutions, adding to the outsourced expertise of ASIC/system-on-chip engineering solutions. This move strongly reflects a strategy of engineering companies to broaden their product lines for the benefit of semiconductor customers.
By location type, on-hore category records notable growth
On-shore ESO engagement is emerging, where collaboration, compliance, and proper management of intellectual property are key area interests of clients. Invested effort by companies includes localizing engineering centers to enable joint innovation. Starting January 2025, a collaboration extension announcement between EPAM Systems and Google Cloud appeared, focusing on the development of cost-effective, AI-solution-driven offerings in media, energy, and retail segments.
Offshore ESO Delivery is also on the rise, with companies tapping into global talent resources for efficient and scalable engineering services in the automotive, industrial, and telecom domains. Collaborations among local engineering companies and MNCs enhance offshore engineering. For example, Tata Electronics announced a strategic partnership with Japan’s ROHM Co. in December 2025 for testing and assembly of automotive-grade MOSFET chips in India, thus further engaging in offshore engineering.
If you choose to purchase the full report at a later stage, the amount already paid will be adjusted, and you will only need to pay the remaining balance.
If you choose to purchase the full report at a later stage, the amount already paid will be adjusted, and you will only need to pay the remaining balance.
If you choose to purchase the full report at a later stage, the amount already paid will be adjusted, and you will only need to pay the remaining balance.
If you choose to purchase the full report at a later stage, the amount already paid will be adjusted, and you will only need to pay the remaining balance.
Global Engineering Services Outsourcing (ESO) Market Regional Analysis
By region, Asia Pacific leads the market growth
Asia Pacific continues to be a key location for ESO because of qualified engineers in the region and developing manufacturing infrastructure. Activities in Asia Pacific increase the pace of growth for outsourced engineering services. In March 2025, a nearly USD 1 billion investment in United States manufacturing and supplier capacity enhancement in the aerospace division of GE was announced, which has an indirect positive influence on Asia Pacific engineering networks due to enhanced global supply chains that offshore services rely on for design and engineering assistance.
The significant automotive and industrial presence in Europe triggers engineering outsourcing due to partnerships in developing new-generation technology. The Europe engineering services demand remains fueled through investments. In January 2025, EPAM Systems further extended its collaboration with Google Cloud to improve artificial intelligence-engineering solutions for energy, media, and retail markets. This example illustrates how European and global businesses leverage partnership investments in digital transformation through engineering services outsourcing.
Competitive Landscape
Industry majors are building their global logistics infrastructure to enable improved engineering competencies with optimized costs. There is investment in offshore and onshore engineering facilities with the adoption of newer technology tools, including digital twins, artificial intelligence, and simulation solutions. With improved knowledge of competencies in domains such as aerospace, automotive, semiconductor, and industry, the majors target complete engineering services with flexibility to serve varied customers.
Companies under ESO intensely invest in partnerships, acquisition, or JVs to tap new technology and expertise. Their key strategy is to scale development, research, and lifecycle services offered by them. Their constant investment in training, digitally enabling, or diversifying service lines allows them to improve competitiveness, as well as tap new business from emerging verticals like energy, telecommunication, and consumer durables.
Alten S.A
Alten S.A is an engineering and technology consultancy firm founded in 1988 and headquartered in Boulogne-Billancourt, France. Alten is a global company that provides R&D and engineering services to industries such as aerospace, automotive, and telecom to help their customers accelerate their product and digital transformation projects.
Altair Engineering Inc.
Altair Engineering Inc. was founded in 1985 and is headquartered in Troy, Michigan, USA. It delivers software and cloud solutions for simulation, design, and data analytics. It majorly operates by catering to engineering innovation and optimization needs related to autos, aerospace, and industry.
Capgemini SE
Capgemini SE was founded in 1967 and is headquartered in Paris, France. Capgemini is one of the global leaders in Consulting, Technology, and Engineering services. The company assists its clients with digital transformation, IT modernization, and outsourced product engineering.
ASAP Holding GmbH
ASAP Holding GmbH was founded in 1990. The Aachen, Germany-based company provides specialized engineering, information technology consulting, and software solutions. The firm specializes in end-to-end product development support and engineering support for the automotive, energy, and industrial sectors.
*Please note that this is only a partial list; the complete list of key players is available in the full report. Additionally, the list of key players can be customized to better suit your needs.*
Other players in the market include AVL List GmbH, and International Business Machines Corporation, among others.
Key Highlights of the Global Engineering Services Outsourcing (ESO) Market Report
- Historical performance and accurate forecasts until 2035: It offers an in-depth analysis of historical market trends and presents effective forecasts for future market performance.
- Information on product developments: Detailed information on product development trends in engineering that are impacting ESO.
- Competitive profiling involving analysis of local and global service firms: Major market players' analysis and their position and strategies employed while competing in the market.
- Regional analysis: The report focuses on opportunities in emerging regions, characterizing industry dynamics, growth patterns, and regional outsourcing tendencies.
- Investment-oriented outlook backed by data analysis: Assessment of market opportunities, M&A deals, alliances, and growth plans which may aid in making investments.
Why Choose Expert Market Research?
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- Actionable data: The kind of data that can be acted upon in terms of strategic decision-making.
- Analysis on regional and product level: Regional and product-based analysis helps ensure a thorough understanding of market-related performance.
Call to Action
Explore the latest trends shaping the Global Engineering Services Outsourcing (ESO) Market 2026-2035 with our in-depth report. Gain strategic insights, future forecasts, and key market developments that can help you stay competitive. Download a free sample report or contact our team for customized consultation on global engineering services outsourcing (ESO) market trends 2026.
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*While we strive to always give you current and accurate information, the numbers depicted on the website are indicative and may differ from the actual numbers in the main report. At Expert Market Research, we aim to bring you the latest insights and trends in the market. Using our analyses and forecasts, stakeholders can understand the market dynamics, navigate challenges, and capitalize on opportunities to make data-driven strategic decisions.*
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Key Questions Answered in the Report
In 2025, the global engineering services outsourcing (ESO) market reached an approximate value of USD 908.75 Billion.
The market is projected to grow at a CAGR of 30.10% between 2026 and 2035.
Key strategies driving the market include acquisitions, partnerships with OEMs, expansion of offshore/onshore centers, adoption of digital and AI-driven solutions, and diversification across sectors like automotive, aerospace, and semiconductors.
The key market trend guiding the industry growth includes the adoption of the service in several sectors, such as oil and gas, product design, process engineering, plant, utilities, R&D, prototyping, infrastructure development, health care equipment, industrial design, innovation, transportation, and others.
The major regions in the industry are North America, Latin America, the Middle East and Africa, Europe, and the Asia Pacific.
Aerospace, automotive, construction, consumer electronics, semiconductors, pharmaceuticals, and telecom, among others, are the leading applications of engineering services outsourcing (ESO) in the industry.
On-shore and off-shore are the major location types of the product.
The key players in the market include Alten S.A, Altair Engineering Inc., Capgemini SE, ASAP Holding GmbH, AVL List GmbH, and International Business Machines Corporation, among others.
Major challenges that the market faces include talent shortages, IP and data security issues, high competition, fluctuating client demand, and adapting to evolving technologies like AI and IoT.
Report Summary
Explore our key highlights of the report and gain a concise overview of key findings, trends, and actionable insights that will empower your strategic decisions.
| REPORT FEATURES | DETAILS |
| Base Year | 2025 |
| Historical Period | 2019-2025 |
| Forecast Period | 2026-2035 |
| Scope of the Report |
Historical and Forecast Trends, Industry Drivers and Constraints, Historical and Forecast Market Analysis by Segment:
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| Breakup by Application |
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| Breakup by Location Type |
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| Breakup by Region |
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| Market Dynamics |
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| Competitive Landscape |
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| Companies Covered |
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