How “The World We Live In” Is Driving Engineering Services Outsourcing Market

One of the cornerstones of the HfS "As-a-Service" economy model is "the world we live in." In the market for product engineering services, we are observing six key changes in the world we live in which are acting as catalysts in the adoption of the engineering services outsourcing model. These changes are:
 

1. Product life cycles are getting shorter which means more product design work and faster time-to-market requirements for enterprises. These requirements are strengthening the value proposition of the business cases around the outsourcing of engineering services.
2. Enterprises are looking to adjacent markets for growth but rather than do it all themselves they are partnering with engineering service providers, that can not only deliver complete new product design but that can even collaborate with manufacturing partners to reduce the total time-to-market and improve the overall margins.
3. Enterprises are entering emerging markets and leveraging engineering service providers to do value engineering and to develop frugal versions of the enterprises' products that can compete at the different price points in these markets.
4. The long tail of products created when technology companies merge (and they wish to maintain all existing revenue streams) is increasing the demand for the external help to manage the lifecycle management requirements of legacy or low growth products. Enterprises coming out of a merger want to focus their limited in-house R&D resources on high potential products and see using engineering service providers as the way to keep the revenues (and the margins) on other products healthy over time.
5. Demand for smart products with the combination of software and hardware is driving enterprises to leverage engineering service providers which have developed expertise over the years across software, hardware and embedded solutions.
6. Availability of composites and lightweight material is enabling enterprises to rethink the design of their products with the help of engineering service providers. For example, by leveraging the composite expertise of engineering service providers, enterprises can convert their products into high performance variants which require less fuel or power making them more attractive to end customers.

In our inaugural 2015 Engineering Services Blueprint Report we will try to understand how top 30 key engineering service providers (AF, AKKA, Alten, Altran, Assystem, Bertrandt, Capgemini, Cognizant, Cyient, EDAG, ESI Group, Ferchau, Genpact, Geometric, HCL, IAV, IGate, Infosys, ITC Infotech, KPIT, L&T Technology Services, Neilsoft, QuEST Global, Ranal, Segula, Semcon, Tata Technologies, TCS, Tech Mahindra, and Wipro) are leveraging above opportunities in the world we live in to help service buyers understand the different engineering services capabilities in the market today and how they are shaping the creation of this market.

We believe that the transformation and evolution of engineering service providers will continue as we move into the “As-a-Service Economy” and that HfS with our understanding of this market and our unparalleled reach to both service buyers and service providers can be a major catalyst for the growth of this sector.