Global Aerospace Engineering Services Outsourcing Market Grows at a Staggering CAGR of 25.7%

Introduction

Outsourcing engineering services utilize the best available technology and services to produce cutting-edge engineering goods at a competitive price. Design, development, testing, and manufacture of aircraft, spacecraft, satellites, missiles, and related systems and equipment fall under the aerospace engineering domain, sometimes known as aeronautical or astronautical engineering. Aerospace engineering services use computer-aided design (CAD) technologies to rapidly draft and revise designs and see completed parts and assemblies in three dimensions. It promotes inventing and utilizing cutting-edge technologies in aerospace vehicle systems for defense, transportation, communication, and exploration.

Market Dynamics

Increasing OEMS and ESO Collaborations Drive the Global Market

The benefits of outsourcing services are utilized by original equipment manufacturers (OEMs) to improve product and service quality, lower prices, and expand their skillsets and experience. OEMs have grown their number of engineering services outsourcing collaborations to remain profitable and competitive. Moreover, OEMs favor cooperating with ESOs to incorporate advanced technologies like the Internet of Things (IoT), Machine-to-Machine (M2M) communications, embedded electronics, and other digitally disruptive solutions while maintaining product exclusivity. In March 2022, Airbus India granted a multi-year contract to L&T Technology Services (LTTS), an IT solutions provider for aerostructure and system design, manufacturing engineering, avionics and software development, aero-engine design, ATM systems, airlines, and MRO solutions.

Advantages offered by Engineering Services Outsourcing Creates Tremendous Opportunities

The market for engineering services outsourcing is primarily influenced by the growing demand for automation and the increasing use of integrated solutions for developing and analyzing. Widespread usage of engineering software, such as architecture, engineering, and construction (AEC) software, computer-aided engineering (CAE) software, computer-aided designing (CAD) software, and electronic design automation (EDA) software, has an effect on the industry. Businesses are outsourcing their engineering activities to less expensive regions due to rising labor prices in developed nations, which increases the need for outsourcing engineering services.

In addition, outsourcing reduces the expenses associated with personnel, operations, additional infrastructure, and office space maintenance. Even from distant locations, outsourcing services offer a platform for talented employees and innovative technologies. Further, the requirement for dependable operating platforms in the maritime, shipbuilding, and offshore industries to overcome bad weather conditions, remote locations, and physical space limits will raise the profit potential for market participants over the projection period.

Regional Analysis

North America is the most significant shareholder in the global aerospace engineering services outsourcing market and is anticipated to grow at a CAGR of 24.5% during the forecast period. Due to the rapid advancement of new technologies and the crucial presence of aerospace original equipment manufacturers, the region is predicted to dominate the sector. In addition, the United States held the largest market share of the software segment in the components category due to the constant developments in the IT industry and the rising deployment of IT services, data center systems, corporate software, and communication systems in the region. The aggressive competition in the U.S. and Canadian aerospace ESO markets will provide a stable revenue trend during the forecast period. Honeywell International Inc. and Altair Engineering Inc. are the leading regional companies, accounting for most of the region's revenue share.

Europe is anticipated to grow at a CAGR of 25.3% during the forecast period. Due to market saturation, fierce rivalry, and challenging economic conditions, the demand for aeronautical ESO in European nations is projected to be weak. In Europe, immediate markets for aerospace ESO, such as Spain and Italy, are anticipated to expand significantly during the forecast period.

Key Highlights

• The global aerospace engineering services outsourcing market was valued at USD 94.34 billion in 2022. It is estimated to reach USD 739.11 billion by 2031, growing at a CAGR of 25.7% during the forecast period (2023–2031).
• Based on service, the global aerospace engineering services outsourcing market is segmented into mechanical engineering, electric/ electronic engineering, embedded software engineering, and others. The mechanical engineering segment owns the highest market share and is expected to grow at a CAGR of 24.7% over the forecast period.
• Based on function, the global aerospace engineering services outsourcing market is divided into design, simulation and digital validation, production process, and maintenance process. The maintenance process segment is responsible for the substantial market share and is expected to grow at a CAGR of 24.6% over the forecast period.
• Based on location, the global aerospace engineering services outsourcing market is bifurcated into onshore and offshore outsourcing activities. The onshore segment owns the highest market share and is anticipated to grow at a CAGR of 26.0% during the forecast period.
• Based on components, the global aerospace engineering services outsourcing market is divided into hardware and software. The hardware segment is the highest contributor to the market and is projected to grow at a CAGR of 25.5% over the forecast period.
• North America is the most significant shareholder in the global aerospace engineering services outsourcing market and is anticipated to grow at a CAGR of 24.5% during the forecast period.

Competitive Players

Competitive Players

The key global aerospace engineering services outsourcing market players are Altair Engineering, AKKA, ALTEN Group, Honeywell International, ALTRAN, Bertrandt, EWI, ITK Engineering GmbH, L&T Technology Services, and LISI Group.

Recent Developments

Market News

• In January 2023, Everest Group included Daffodil Software, a global provider of software engineering solutions, in the PEAK Matrix® Assessment 2022. Daffodil was acknowledged twice after its initial evaluation in 2021. The supplier has been positioned as an "Aspirant" in the Software Product Engineering Services market for the BFSI, Healthcare, and Retail industries.

• In January 2023, Cognizant agreed to purchase Mobica, a Manchester, United Kingdom-based IoT software engineering services provider. Mobica's services span the entirety of the software development lifecycle, with core expertise in the design, testing, implementation, and deployment of embedded software and a focus on strategic internal research and development initiatives for clients.

Segmentation

Global Aerospace Engineering Services Outsourcing Market: Segmentation

By Service

• Mechanical Engineering
• Electric/ Electronic Engineering
• Embedded Software Engineering
• Others

By Function

• Design
• Simulation and Digital Validation
• Production Process
• Maintenance Process

By Location

• Onshore
• Offshore

By Component

• Hardware
• Software

By Regions

• North America
• Europe
• Asia-Pacific
• Latin America
• The Middle East and Africa