U.S. engineering outsourcing market to hit $93.95Bn by 2027 — Technavio

NEW YORK, UNITED STATES — The United States engineering services outsourcing (ESO) market is projected to expand by $93.95 billion from 2022 to 2027, with a compound annual growth rate (CAGR) of 23.34%. 

According to a report by Technavio, this growth is primarily driven by the cost benefits of lower labor wages, access to high-quality manpower, and the absence of in-house expertise in certain engineering domains.

Labor arbitrage, or the practice of relocating business operations to more cost-effective locations, is becoming increasingly prevalent due to the expanding U.S. economy. Outsourcing also allows businesses to access skilled labor and advanced technologies, enabling them to scale operations based on demand.

Innovation is also a key trend in the ESO market. Many U.S. companies, especially startups, are outsourcing creative tasks to countries with cheaper labor. Outsourcing of advanced technologies like cloud-based delivery and augmented reality is becoming a financially and strategically viable option for industries such as manufacturing, aerospace, and banking.

The offshore outsourcing segment, which involves transferring engineering processes to organizations abroad, is expected to contribute significantly to market share growth. Value-based collaborations between customer organizations and outsourced engineering service providers (ESPs) are expected to increase.

However, a significant challenge to market growth is the risk of intellectual property theft and misuse. U.S. companies are cautious about outsourcing engineering design and product development due to the potential loss of confidential designs and information. 

Major players in the U.S. engineering services outsourcing market include Atos SE, Alten SA, Capgemini, Cognizant, Cyient, EPAM Systems, and Infosys. To enhance their market presence, these companies are implementing strategies such as strategic alliances, partnerships, mergers and acquisitions, and geographical expansion.