This research report titled ‘ESO Market in APAC 2016-2020’, provides an in-depth analysis of market growth in terms of revenue and emerging market trends. This market research report also includes up to date analysis and forecasts for various market segments, including telecom, automotive, consumer electronics appliances, construction, semiconductors, pharmaceuticals, and OEMs.
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“For over a decade, global companies have invested in engineering talent pools in APAC countries such as India. Therefore, the country has emerged as a foremost preferred destination for ESO over the years. Moreover, government in APAC are taking efforts to ensure that the commercial potential of this sector is fully realized,” said Amrita Choudhury, one of Technavio’s lead analysts for automatic identification system research.
“For instance, a national design policy has been formulated to catapult Indian brands onto the global stage. Several companies worldwide (from the automotive, defense, aerospace, and construction sectors) are increasingly outsourcing their engineering services to India. The availability of resources at low costs is one of the major factors driving the ESO market in India, and it is expected to account for 30% of the over revenue generated in the global ESO market by 2018. The Philippines, Myanmar, and South Korea represent other low-cost destinations in APAC,” added Amrita.
End-user segmentation of ESO market in APAC 2015
- Telecom 18.4%
- Automotive 18%
- Consumer electronics appliances 12.3%
- Construction 9.8%
- Semiconductors 8.1%
- Pharmaceuticals 7.3%
- OEM 7.4%
- Others 18.7%
Telecom industry: largest market for the ESO market in APAC
In 2015, the telecom service segment led the market with an 18.4% share. Companies in the telecom industry outsource their engineering services to emerging countries such as India and China. The industry is growing rapidly, backed by convergence, mobility, digitization, cloud computing, and social media. ESO services in the telecom industry include PLC management, interoperability, migration, technologies empowerment, unified communications, VoIP and IMS, virtualization and VAS.
The growing market demand for new products, such as electric cars, car electronics, and telematics has therefore boosted the demand for ESO services. The need for cost reduction, faster time-to-market, and market competition are some of the major factors driving the demand for ESO in the telecom industry. The industry finds an increased pressure to reduce costs, improve efficiencies. Testing services have now become an inherent part of the product development life cycle management and for deploying software. Such services address risks at early stages of the product life cycle to assure reliability and compliance.
Technavio researchers have observed that spending on independent testing is growing faster than spending on embedded testing, with development, application management, and systems integration as some key services, and this trend is likely to continue over the forecast period.
Automotive industry: second largest ESO market in APAC
The automotive industry is one of the fastest growing industries in APAC. The region is one of the key outsourcing destinations for this industry. Multinational corporations (MNCs) are creating captive centers in countries, such as India and China, to outsource their manufacturing and engineering services. The availability of a low-cost and highly skilled workforce in the region is driving market growth.
Customers, particularly in the automotive industry expect a complete solution package that includes engineering and information technologies. Technavio researchers anticipate, ESOs will develop intelligent systems that combine networking, mobility, data pools, and analytics to create a meaningful experience for consumers. This information is stored in the cloud and can be accessed by authorized entities from any location. Engineering service providers are now offering services that combine the best of engineering and IT services. Most companies consider APAC a favorable destination due to its abundant talent pool, cost efficiencies, and proven engineering capabilities.
Consumer electronics industry: third largest segment
The consumer electronics industry thrives on innovation and new product development because products in this industry have low shelf lives. Shrinking product life cycles and growing consumer expectations are therefore driving down profit margins. Therefore, to stay ahead in the competition, the consumer electronics industry outsources its services to third-party service providers for a sharper focus on its core activities. This industry generally outsources its hardware, mechanical, software engineering, and product testing services.
Hardware ESO services include FPGA, ASIC design, board and system design, verification, and validation. Mechanical ESO services include conceptualization, implementation and design, and product support. Software ESO includes development of software frameworks, as well as SDK development and middleware support. Software ESO services provide product support. Product testing services include test automation framework development, automated test bench development, IoT testing, functional testing and field testing, regression testing, and protocol conformance testing.
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