About 60% of corporate houses around the world are likely to outsource their engineering R&D activities over the next three years as talent shortages threaten to make them fall behind in the race for innovation.
Outsourcing is the only viable option left for large and research-dependent corporations, according to the latest survey of 500 senior engineering executives by research firm Bain & Company.
One of the most surprising findings of the report is the fact that companies are giving thought to outsourcing not to save money, but rather to gain access to talent.
In the race to innovate faster amid a talent shortage, engineering and R&D organizations are making a bold move: outsourcing and offshoring an unprecedented amount of work once done in-house. https://t.co/28Jxc8Q1tB pic.twitter.com/Wxf9acgI5W
— Bain & Company (@BainandCompany) April 26, 2023
The Y2K bug gave IT outsourcing one of its first pushes in the early 2000s. Now, the need for innovation and survival in an increasingly competitive market is fueling offshoring.
Engineering services being outsourced range from basic research to designing products and developing plans for state-of-the-art manufacturing facilities.
Until recently, companies outsourced only trivial activities such as testing and compliance. Today, they are outsourcing entire product designs and the creation of critical components such as combustion engines.
In the survey, more than 80% of respondents said they have a serious shortage of expertise in data analytics, artificial intelligence, cybersecurity, the Internet of Things and data engineering.
The industries that are prioritizing outsourcing include automotive, mobility, medical devices, energy, natural resources and aerospace and defense.