Product Engineering Services Market Share, Forecast | Growth Analysis

The Product Engineering Services Market size was valued at $ 1056.2 billion in 2022 and is expected to grow at a CAGR of 7.4% from 2022 to 2027. The revenue forecast for 2027 is projected to reach $ 1510.0 billion. The historical data spans from 2022 to 2027. The growing need for continuous innovation and iteration, reduce production cost, rising demand for smart homes are the major factors fueling the growth of product engineering services market. Product engineering is the process of designing, developing, and testing software, device, system, or an assembly. Key focus areas include new product development, product design, prototype testing, and maintenance services. The growing demand for enriching customer experience emphasizes cutting-edge product engineering services. A product engineering service provider focuses on reducing the total cost of ownership for new solutions, minimizing Time-to-Market (TTM), and re-designing products. Organizations face the challenge of limited workforce and budget constraints to reduce the product's time-to-market.

Product engineering service providers assist such organizations in accelerating their TTM while maintaining their service or product quality. The emergence of IoT is expected to provide new lucrative opportunities for organizations during the forecast period. IoT offers benefits such as sensor-driven decision analytics, optimized resource consumption, process optimization, enhanced situation awareness, and instantaneous control and response in the complex autonomous system. IoT-driven product innovations build strong business cases, increase Return on Investment (RoI), and reduce time-to-market.

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Product Engineering Services Market Dynamics

Drivers: Increase demand of advanced technologies

Almost every industry is in need of custom and high-quality parts. Every sector requires innovation, from automotive to aerospace, electrical connectors to chemical processes. A variety of new and emerging technologies make progressive manufacturing possible. Most advanced manufacturing revenue is reinvested in R&D to improve production methods. Rather than investing in innovation, traditional manufacturing typically invests in higher output at a lower cost.

As a result, instead of developing new equipment, they usually acquire more manufacturing space and machines. Advanced technology is defined as a new or developing IT innovation with few users but promises to provide significant value in the future. While this term differs from advanced manufacturing and manufacturing technology, they are related. Advanced manufacturing uses progressive technology and manufacturing technology to improve supply chain processes and products.

Restraint: High initial upfront cost in designing new product engineering services

Financing smart projects may restrain market growth. High capital expenditure combined with mounting upfront IoT infrastructure designing, new product development, testing, and product launch costs will affect the adoption of product engineering services across various industry verticals. Moreover, with the limited existing budget for enterprises, convincing them of the tangible and intangible benefits of advanced product engineering services can be challenging.

The perception of the high cost associated and lack of awareness about its long-term cost savings can hinder the deployment and growth of the IoT engineering services market. The highly skilled technicians are required to design the field-level devices, replace aging infrastructure, arrange transmission networks between the end users, and manage integrating new and existing solutions within the legacy systems. Some enterprises cannot use product engineering services owing to inadequate budgets, poor technological infrastructures, lack of public awareness, low literacy rate, and various others. Even the developed nations in Europe and North America face difficulties replacing their legacy infrastructures with new and smarter ones.

Opportunities: Increase in number of smart city projects

The smart city is a conceptual model that delivers cutting-edge services and infrastructure. A smart city is achieved through smart technology infrastructure and governance. IoT engineering services play a key role in designing an advanced IoT infrastructure and connecting companies and governments with all innovative prospects, such as smart cities, smart transportation, and smart utilities, in getting real-time location-based data.

Thus, new IoT infrastructure offers significant opportunities for IoT engineering service providers. It helps to draw a rough sketch for real-time remote management and control, monitoring of objects, and analysis of data collected from connected devices such as cameras, sensors, mobile phones, and networking devices. Additionally, smart city projects have created opportunities for various sectors such as energy, healthcare, transportation, and other utilities for better monitoring and efficient management of the entire infrastructure.

Challenges: Lack of technical experts

Leading manufacturers are dealing with uncertainty due to digitization and changing customer expectations. The manufacturing industry is one of the most significant wealth-generating sectors of the global economy, employing a sizable portion of the global workforce to create materials required by organizations in various industries. Furthermore, as the call for innovation and digitization becomes louder, manufacturers must devise new strategies and invest more in technology to gain a stronger foothold. As a result, the advent of technology has presented the industry with a new set of challenges that must be addressed to maintain the growth momentum of the market. While not all manufacturing jobs will necessitate extensive software development or IT training, they will demand knowledge of digital technologies and systems.

With the introduction of no-code platforms in manufacturing, digitally capable workers have more opportunities than ever to make a difference without having to write production-ready code. More data is generated in modern manufacturing plants than ever before. Manufacturers will increasingly discover a competitive advantage hidden within massive data sets. Organizations will need to recruit capable analysts from schools to remain competitive in manufacturing and find ways to assist experienced workers in developing proficiency with large data sets, basic machine learning, and statistical analysis. So there is a lack of technical experts in the manufacturing, automotive, and aerospace industries which is a challenge for the market.

Based on organization size, large enterprises segment to be the largest contributor to the product engineering services market growth during the forecast period

Most businesses seek faster innovation and lower operational costs. Product engineering services enable organizations to increase the speed and agility of their operations, which aids in customer engagement. An enterprise can use effective digital product development services to create prototypes that will help their business grow. Smart businesses have realized that in order to turn their technology roadmap into a reality, they must maximize their capabilities. To implement the best products within the organization, they must gain platform expertise in the latest tools and technologies, as well as software, and introduce new accelerators and frameworks.

Product Engineering Aids in the Early Stages of Product Development: Any company can benefit from the opportunities offered by the information technology sector, which can also significantly improve its performance. On the other hand, developing amazing software that is both cost-effective and time-effective can be challenging. Product engineering services assist such businesses by utilizing the stages of the product engineering approach.

Based on vertical, healthcare & Life Sciences segment is to be a larger dominator to the product engineering services market during the forecast period

Product engineering services helps to track the personal health of users. There are numerous advantages to using product engineering services, including having access to one's own medical records, health or diagnostic data self-monitoring, active data collection and documentation. It also helps to communicate between users. Technology advancements continue to revolutionize health care, resulting in improved outcomes, diagnosis, and prevention. To perform their functions, medical devices of all types now incorporate powerful processors, proprietary software, and rely on numerous algorithms and network connectivity. However, because health and lives are at stake, the healthcare industry requires products that are as precise as possible at every step. Product engineering and IoT are reshaping the healthcare landscape with innovations that help reduce healthcare costs, encourage patient engagement, improve population health, and, ultimately, make healthcare more accessible and transparent at all levels.

Product engineering typically entails working to resolve issues related to price, product excellence, the implementation process, dependability, maintenance, expected product lifespan, and user features; and the Healthcare industry can benefit significantly from product engineering by developing Healthcare products using a faster go-to-market strategy and ensuring that these products are successful and widely accepted in the market. While many companies work on developing products for the healthcare industry, product engineering service providers should concentrate on developing apps that make healthcare simple and affordable. Product engineering solutions include some of the most commonly used healthcare solutions, such as dynamic and real-time patient monitoring systems (remote monitoring), emergency response systems, and the like. The use of product engineering in the healthcare industry has caused a great revolution because it focuses on next-generation products and technologies. Stronger domain competencies provide end-to-end product development solutions and provisions.

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Asia Pacific to grow at the highest CAGR during the forecast period

For decades, export manufacturing has been a driving force behind Southeast Asia's remarkable socioeconomic development. Even though several other Asian manufacturing economies have evolved into global leaders in advanced industries and innovation, the majority of Southeast Asia is still viewed as a low-wage assembly labor market. The Association of Southeast Asian Nations (ASEAN) has a unique opportunity to advance the manufacturing value chain. Meanwhile, next-generation Industry 4.0 technologies and increasing pressures on businesses to reduce greenhouse gas emissions create new opportunities by changing the game. Manufacturing exports from ASEAN's ten member countries increased at a 5% annual rate from 2015 to 2019, outpacing the global average of 3%. While labor-intensive assembly work has driven manufacturing growth, higher-value goods such as machinery and electronics have also seen strong export growth. Domestic investment is also becoming a more important driver. While FDI inflows into Indonesia fell by 14% from 2015 to 2019 compared to the previous five-year period, domestic capital formation increased by 14%.

The Salim Group of Indonesia invested USD 956 million to increase the domestic manufacturing capacity for vegetable oil, margarine, and other food products. Vingroup, a Vietnamese conglomerate, has invested USD 3.5 billion in its automotive subsidiary Vinfast, beginning with a factory in Haiphong capable of producing 250,000 cars per year. In January, the automobiles and auto parts sector led the Asia manufacturing sector output rankings. For the third time in the last six months, it experienced the fastest growth rate among all categories. In second and third place, respectively, were household and personal use products and machinery and equipment, followed by metals & mining and chemicals. Construction materials expanded moderately as construction activity improved in many countries as lockdowns were lifted. These are driving the growth of this region's product engineering services market.

List Top Product Engineering Services Companies

Alten (France), AVL (Austria), HCL (India), Akka Technologies (France), IBM (US), Capgemini (France), TCS (India), Wipro (India), Accenture (Ireland), Happiest Minds (India), NeST Digital (India), Tvs Next (US), Mphasis (India)  are the key companies in product engineering services market.

Product Engineering Services Market Report Scope

This research report categorizes the product engineering services market based on applications, rack units, organization size, vertical, and region.

Based on Service, the product engineering services market has been segmented as follows:

• Product Engineering
  • Product Design
  • Product Development
  • Product Testing
  • Deployment and Integration
• Process Engineering
  • Manufacturing Engineering Support
  • Knowledge-Based Engineering (KBE)
• Support, Maintenance, and Operations

Based on organization size, the product engineering services market has been segmented as follows

• Small and Medium-sized Enterprises
• Large Enterprises

Based on verticals, the product engineering services market has been segmented as follows

• Automotive & Transportaion
• Industrial Manufacturing
• Healthcare & Life Sciences
• IT & Telecom
• Aerospace & Defense
• Banking, Financial Services, and Insurance
• Energy & Utilities
• Others (Oil & Gas, Construction, and Retail & eCommerce)

Based on regions, the product engineering services market has been segmented as follows:

• North America
  • US
  • Canada
• Europe
  • UK
  • Germany
  • France
  • Rest of Europe
• Asia Pacific
  • China
  • Japan
  • India
  • Rest of Asia Pacific
• Middle East and Africa
  • KSA (Kingdom of Saudi Arabia)
  • United Arab Emirates (UAE)
  • Rest of Middle East and Africa
• Latin America
  • Brazil
  • Mexico
  • Rest of Latin America

Recent Developments

• In June 2022, HCL introduces Industry NeXT to help businesses accelerate industry 4.0 transformation. It enables businesses worldwide to plan, prepare, and seamlessly transition into a collaborative ecosystem. HCL’s strong engineering and digital infrastructure heritage, combined with its leadership in emerging technologies and innovation, form the foundation of Industry NeXT.
• In May 2021, AKKA Technologies has partnered with AURA AERO, to develop electric aircraft. This collaboration would provide AURA AERO with extensive R&D capabilities spanning engineering to customer support.
• In February 2022, IBM completed its acquisition of Neudesic, a cloud services consulting firm based in the US. The acquisition aimed to broaden IBM’s hybrid multi-cloud services offerings as well as to strengthen the company’s AI and hybrid cloud strategy.
• In April 2021, Capgemini launched Capgemini Engineering. The company’s goal with this launch was to assist businesses in developing next-generation products and services while also allowing them to comply as the physical and digital worlds converge.

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