Mastering Engineering Service Outsourcing in the automotive industry

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Market study
Automotive producers are still not pushing outsourcing to as great an extent
as in aerospace, for example (see snapshot below). One example for this
is the E/E domain, where case-based evidence argues for the merits of
entrusting external engineers with regional adaptations and derivatives for
vehicle variants. However, many OEMs emphasize the importance of having
their own captive R&D centers, and started to install themselves in low-cost
location, instead of outsourcing to an external party. Generally speaking,
external Engineering Service Providers are frequently considered only as
extended workbenches that occasionally compensate for inhouse capacity
and capability bottlenecks rather than fully recognized and entrusted
development partners.
Overall, in 2008, the automotive engineering service outsourcing market
accounted for only a relatively small share of slightly below 10% of total
automotive R&D spend. Given the pressures on the automotive industry,
it will rise slowly but steadily to about 12% by 2013, thus growing at 4-5%
p.a., well above the captive R&D spend (slightly declining at -0.1% p.a.).
A strong decline in the captive R&D spend level is not expected, as major
adjustments are rather difficult due to running contracts of R&D staff and
the need to keep core know-how and technology in house.