60% of engineering execs eyes ER&D outsourcing — survey

MASSACHUSETTS, UNITED STATES — Around 60% of engineering executives plan to increase their engineering research & development (ER&D) outsourcing in the next three years.

According to a survey by management consulting firm Bain & Company, most ER&D firms are outsourcing and offshoring to innovate faster, address talent shortages and cut costs. 

Similarly, 60% plan to shift work offshore or nearshore in the same period. 

“As companies adjusted working practices in response to COVID-19, many in-house teams began challenging the notion that service providers need to be in close proximity, increasing the opportunities for outsourcing,” wrote Bain in its report. 

Over 80% of senior executives surveyed by Bain are struggling with talent gaps in areas requiring digital expertise — including data engineering, data analytics, artificial intelligence, cybersecurity, the Internet of Things (IoT), connectivity, and systems engineering. 

Due to this trend, 73% of respondents said industry or technology expertise is the most important factor in selecting an outsourcing partner. Meanwhile, 59% of respondents said cost savings would be their priority in founding a third-party provider. 

ER&D functions often refer to activities aimed at developing new products and services and improving existing ones. It includes foundational research, design testing, product verification, infrastructure, and post-production support.