After the worldwide economic crisis of 2008 and 2009, many companies were forced to cut costs by reducing their employee bases and freezing expansion plans.

During this time, vendors in the Global Engineering Service Outsourcing Market flourished as companies in the Americas and EMEA region opted to outsource engineering and take advantage the lower fees in the APAC region.

The economy has started recovering since then, and cost cutting is a smaller priority for business owners, which eliminates one of the key drivers for the ESO market. That said, the demand for ESO providers is thriving and expected to continue in growth at a CAGR of 26.02 by 2016. This upward trend is thanks to the following 3 advantages of outsourcing engineering jobs to the APAC:

#1) Minimizing Product Development Cycle

Preferred outsourcing destinations such as India and China provide 24/7 services to their clients, which helps companies minimize the product development time by almost 25-30 percent.

#2) Quantity of Skilled Labourers

Most companies in the US and Europe are experiencing a shortage of skilled engineers and it is becoming increasingly difficult to train and retain candidates with the appropriate skill-sets for critical businesses. End-users have realized the massive talent-pools in the APAC region.

#3) Time Saving

A lot of businesses across the globe outsource non-core engineering tasks such as 3D modelling and drafting, which provides flexibility to their in-house team to focus more on important and core tasks.

With these huge benefits, it’s hard to think of any reason that the Global ESO Market might be challenged in the next few years. Unfortunately, the multitude of advantages offered by the market leads to a large obstacle: excessive demand.

According to TechNavio’s report on the ESO market, India would need more than 2 million engineers in addition to their current strength by 2016 to capitalize on the huge potential of the Global ESO market. Although numerous graduates are passing out of engineering colleges every year in India and China, only a few are from world-renowned institutes.

For this reason, it’s possible that India will experience a decline, or at least a plateau in their growth within the market. Even so, it’s likely that any gap left in the Global ESO Market by India’s service shortage will be filled by the growing industries in China, Russia and new players such as Nigeria and Vietnam. In addition, TechNavio analysts predict that new industry trends including domain specialization and global expansion will offset any other hindrances encountered by the Global Engineering Service Outsourcing Market, insuring upward growth in the years to come.

For more information, view our 2012 Global ESO Market Report.

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Global Software as a Service Market 2012-2016
Global IaaS Market 2012-2016