ENGINEERING SERVICES OUTSOURCING MARKET Challenges and Opportunities

One of the key challenges for the engineering services outsourcing market is the risk of intellectual property theft. When companies outsource their engineering work, there is always a risk that their proprietary designs, plans or secret sauce technologies could end up in the hands of competitors if the outsourcing firm or its employees fail to maintain credibility. Companies have to invest heavily in auditing their vendor partners and ensuring watertight contractual agreements and penalties for misuse of confidential data. However, complete elimination of such risks may not be possible. Firms also have to accept a certain level of risk as the nature of outsourcing work overseas entails less control and oversight compared to an in-house setup. This IP protection challenge puts pressure on pricing and discourages organizations from outsourcing more strategically important engineering tasks.

Market Opportunity - Emerging Technologies to Create Novel Opportunities

The engineering services outsourcing market has substantial opportunities arising from new and emerging technologies. As technologies advance rapidly in areas like artificial intelligence, machine learning, automation, IoT, and 3D printing. They unveil novel possibilities for engineering and product development. Outsourcing service providers that make early investments and build strong competencies in these new fields will be well placed to benefit. They can offer cutting edge solutions to client companies and industries across automation, data analytics, simulation, and virtual/augmented reality. This will help them tap into new streams of projects and larger, more complex deals. It can also help reduce dependence on traditional outsourcing of design/testing services and commoditize some of those offerings.