U.S. Engineering Services Outsourcing Market Size, Share & Trends Analysis Report By Service (Designing, Prototyping), By Location (On-shore, Off-shore), By Application, By Country, And Segment Forecasts, 2023 - 2030

Market Size & Trends  

The U.S. engineering services outsourcing market size was valued at USD 282.1 billion in 2023 and is anticipated to grow at a CAGR of 17.2% from 2023 to 2030. This expansion is driven by the increasing demand for cost efficiency and faster time-to-market solutions. The surge in technological advancements, coupled with the need for businesses to stay competitive in the rapidly evolving digital landscape, has led to a rise in outsourcing engineering services. Furthermore, the growing trend of remote work and the availability of skilled professionals in outsourcing countries are also contributing to this upward trajectory.

The U.S. accounted for approximately 13.8% revenue share of the global engineering services outsourcing market in 2023. While there are no specific federal laws that regulate outsourcing transactions, contract law, which is generally governed by state law, is subject to various applicable federal laws. For instance, the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and the Health IT for Economic and Clinical Health Act of 2009 (HITECH) impose strict security and privacy standards to safeguard protected health information, affecting outsourcing in the healthcare sector. The Gramm-Leach-Bliley Act of 1999 (GLBA) mandates financial institutions to sign contracts with their BPO partners, requiring the provider to comply with GLBA’s data collection and usage transparency rules. Furthermore, the Worker Adjustment and Retraining Notification Act of 1988 (WARN) requires employers to give their employees written notice of layoffs. These regulations, among others, can significantly impact the operations and decisions of U.S. companies outsourcing engineering services. Compliance with these regulations is crucial to avoid legal repercussions and maintain a company's reputation.

Application Insights

The automotive segment held the largest revenue share, accounting for 20.4% in 2023. This dominance can be attributed to the rapid demand for advanced and enhanced connectivity solutions by automotive manufacturers. The surge in technological advancements, such as the rise of electric vehicles (EVs) and autonomous vehicles (AVs), has led to an increased demand for specialized engineering services. As vehicles advance in connectivity and automation, software's significance in the development process is escalating. To address this need, outsourced automotive service providers are enhancing their software engineering capabilities, encompassing design, development, testing, and integration. In addition, there is an increasing demand for comprehensive end-to-end product development and integration support. The industry is also experiencing a transition towards software and digital engineering services.

On the other hand, the healthcare sector segment is predicted to witness the fastest growth in revenue, with a CAGR of 19.7% from 2023 to 2030. The anticipated surge in workload of the healthcare industry in the region is expected to significantly increase demand for outsourced engineering services. The primary drivers of this growth include a shortage of skilled software engineers and an increasing need for digital transformation. North America is forecasted to remain the largest market for outsourcing automotive engineering services, owing to the presence of original equipment manufacturers that provide advanced engineering solutions.

Service Insights

The testing services segment held the largest revenue share in 2023. The growing emphasis on high-performance and error-free products has fueled the prominence of testing throughout the development lifecycle. This prioritization necessitates the creation and iteration of product prototypes with a focus on optimization and defect prevention. As products become more complex and integrated, the role of testing in the development process is becoming increasingly important. Outsourced testing services providers are expanding their capabilities to meet this demand, including software testing, hardware testing, and system integration testing.

The designing services segment is expected to grow at a CAGR of 19.2% from 2023 to 2030. The growth in the designing services segment can be attributed to the rising demand for innovative and optimized designs across various sectors. As the market becomes more competitive, companies are seeking to differentiate their products and services through unique and innovative designs. This has led to an increased demand for outsourced designing services as companies look to leverage the expertise and capabilities of external partners. Furthermore, the rise of digital technologies such as computer-aided design (CAD) and computer-aided engineering (CAE) has also contributed to the growth of the designing services segment.

Location Insights

The onshore segment held the largest revenue share of 83.8% in 2023. This dominance can be attributed to several factors, such as a strong alignment with client cultures and languages, geographic proximity facilitating in-person interaction, and streamlined communication channels. Onshore outsourcing allows for better coordination and control over the project, leading to improved quality and efficiency. It also reduces the risks associated with different time zones and legal systems. In addition, onshore outsourcing is frequently favored for projects involving sensitive data or intricate tasks necessitating close collaboration between the client and the service provider.

The offshore segment is predicted to witness the fastest growth, with a CAGR of 22.1% from 2023 to 2030. This growth can be attributed to the cost advantages offered by offshore locations. In addition, offshore locations often have a large pool of skilled professionals, allowing companies to access specialized expertise that may not be readily available in their home country.

Key U.S. Engineering Services Outsourcing Company Insights

Some of the key players operating in the market include Alten SA, Cognizant, and Atos SE:

• Alten SA is a key player in the U.S. market, offering specialized engineering services tailored for product research and development. Their approach integrates advanced R&D methods, fostering innovation and technological breakthroughs in diverse industries.

• Atos SE is another prominent company in the market, offering engineering services outsourcing, which modernizes knowledge and collaboration management. They are recognized for their contribution to the digital transformation of organizations in the U.S. engineering services outsourcing industry.

Recent Developments

• In February 2024, MGS established its Global Engineering Services Group, uniting over 85 engineers and 200 global toolmakers. This expansion empowers Pharma, Diagnostics, and MedTech innovators to expedite healthcare projects from concept to validated production. The move follows strategic acquisitions bolstering MGS's front-end engineering expertise and global reach across North America and Europe.

• In June 2024, Cognizant acquired Belcan, a digital engineering firm. This expands Cognizant's reach into the aerospace, defense, space, and automotive industries. Belcan brings a global footprint with a strong client base including Boeing, General Motors, Rolls-Royce, NASA, and the U.S. Navy.

• In May 2024, Tech Mahindra entered into a strategic alliance with Atento to deliver comprehensive business transformation solutions across the Americas, Europe, and the Middle East & Africa.

U.S. Engineering Services Outsourcing Market Scope

U.S. Engineering Services Outsourcing Market Segmentation

This report forecasts revenue growth and provides an analysis of the latest industry trends in each of the sub-segments from 2018 to 2030. For this study, Grand View Research has segmented the U.S. engineering services outsourcing market report based on application, services, and location:

• Application Outlook (Revenue, USD Billion, 2018 - 2030)

  • Aerospace

  • Automotive

  • Consumer Electronics

  • Semiconductors

  • Healthcare

  • Telecom

  • Industrial

  • Others

• Service Outlook (Revenue, USD Billion, 2018 - 2030)

  • Designing

  • Prototyping

  • System Integration

  • Testing

  • Others

• Location Outlook (Revenue, USD Billion, 2018 - 2030)

  • On-shore

  • Off-shore