Authored By: Sarah
20 Feb 2025

Automotive Engineering Services Outsourcing Market Analysis 2024-2028

The automotive engineering services outsourcing market is expected to grow by USD 67.71 billion between 2023 and 2028, at a CAGR of 11.3%. The market is witnessing significant growth due to the cost-effectiveness of outsourcing, increasing demand for connectivity solutions, and the rise in electric vehicle sales. However, concerns over data security and privacy pose challenges for market players.

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Market Dynamics

Key Market Drivers

Cost-effectiveness of outsourcing: Automotive manufacturers, including Altair Engineering Inc., are outsourcing engineering services to reduce expenses related to research facilities, equipment, wages, and training costs. This allows companies to focus on core competencies while leveraging specialized expertise.
Product innovation and electrification: The market is driven by developments in electrification, hybridization, methane combustion, and lightweight vehicles. Engineering subsystems such as mechanical, electrical, electronic, software, and safety engineering play a crucial role in designing and integrating new vehicle technologies.
Growing demand for connectivity solutions: The need for smart infotainment, navigation, remote diagnostics, and vehicle positioning has increased, contributing to market growth.

Significant Market Trend

Integration of advanced technologies: OEMs are investing in autonomous driving, ADAS, LIDAR, GPS, radar, and inertial measurement units (IMUs) to improve vehicle safety and efficiency. Prototyping and testing centers are essential to ensure these technologies comply with safety regulations.

Major Market Challenge

Threats to data security and privacy: Outsourcing increases cybersecurity risks, as third-party providers gain access to sensitive automotive engineering data. The increasing digitization of automotive systems makes companies vulnerable to data breaches and privacy violations. Enterprises must implement strong security protocols, encryption, firewalls, and intrusion detection systems to mitigate these risks.

Market Segmentation

By Location:

Onshore
Offshore

By Vehicle Type:

Passenger Vehicles
Commercial Vehicles

Regional Market Trends

APAC is expected to account for 43% of market growth during the forecast period. The market is expanding due to cost savings, local talent availability, and strong infrastructure in the region. Automotive companies in North America and Europe are increasingly outsourcing services to APAC to focus on core competencies and operational efficiencies.

APAC
- China
- Japan
Europe
- Germany
- Italy
North America
- US
South America
Middle East & Africa

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Key Market Players

The following companies are implementing strategic alliances, partnerships, mergers & acquisitions, and product launches to strengthen their market presence: