Blog

The global Product Engineering Services Market is projected to reach USD 2,107.2 million by 2032, growing at a compound annual growth rate (CAGR) of 7.5% between 2026 and 2032, according to the latest industry analysis. The market, valued at USD 1,272.6 million in 2025, is set to expand rapidly as enterprises worldwide intensify their focus on innovation, digital transformation, and engineering agility.

The surge in demand for faster time-to-market solutions, specialized product design expertise, and end-to-end lifecycle management is redefining how companies build and deliver products in today’s hypercompetitive environment. The integration of emerging technologies such as Artificial Intelligence (AI), Internet of Things (IoT), cloud, and edge computing is unlocking new possibilities for organizations to enhance efficiency and deliver superior customer experiences.

AI-Powered Engineering and Automation: The Defining Trend

The adoption of AI and automation is transforming the landscape of product engineering. From design and simulation to testing and deployment, AI-driven tools are enabling unprecedented speed and accuracy in product development.

Leading firms are leveraging generative AI to automate code generation, testing, and documentation. For instance, in September 2024, Tata Consultancy Services (TCS) reported a 20% reduction in development timelines using generative AI capabilities. Similarly, digital twin and machine learning technologies are streamlining predictive maintenance and virtual testing, reducing costs by up to 30% while accelerating iteration cycles.

“The integration of AI and automation is no longer a competitive advantage—it’s an industry imperative,” said [Spokesperson Name], [Title], [Organization Name]. “Engineering service providers that embed these technologies into their workflows are delivering smarter, faster, and more cost-efficient solutions, driving a new era of intelligent product innovation.”

Connected Products Driving Market Expansion

The rapid proliferation of connected devices, from smart homes to autonomous vehicles, is another major growth catalyst. The automotive industry, in particular, is undergoing a revolution—with 17 million electric vehicles sold globally in 2024, accounting for over 20% of new car sales. The push toward vehicle-to-vehicle (V2V) and vehicle-to-infrastructure (V2I) connectivity has amplified the need for robust engineering capabilities.

As modern vehicles evolve into “rolling data centers” generating up to 4 terabytes of data per day, demand for specialized product engineering services—spanning embedded software, data analytics, and cybersecurity—continues to surge.

Segmental Insights

• By Service Type: Product Design & Development dominates with a 45% share in 2025, while Support & Maintenance is the fastest-growing category (CAGR 7.6%).
• By Organization Size: Large Enterprises lead with 60% market share, while SMEs grow fastest (CAGR 7.8%) due to flexibility and cost efficiency.
• By Application: Customer Enterprise Products account for 55% of the market, while Customer Mobile Products register the highest growth (CAGR 7.7%) amid the 5G and AR/VR boom.
• By Vertical: Healthcare dominates with a 30% share in 2025, driven by IoT-enabled diagnostics, remote monitoring, and medical device innovation.
• By Region: North America leads with 35% share, while Asia-Pacific exhibits the highest growth rate, supported by rapid digitalization in India, Vietnam, and Malaysia.

Regional Highlights

• North America: Strong R&D investments, presence of global tech leaders, and innovation-led growth are fueling demand. In March 2025, GE Aerospace announced a USD 1 billion expansion of engineering operations in the U.S.
• Asia-Pacific: Emerging as the fastest-growing region, powered by digital transformation initiatives and an expanding STEM workforce. India’s 1,700+ Global Capability Centers (GCCs) position it as a global hub for product engineering.
• Europe: Driven by advancements in automotive, aerospace, and industrial manufacturing, with Germany and France leading the regional growth trajectory.

Competitive Landscape

The market remains fragmented, featuring leading players such as Alten Group, AVL Group, HCL Technologies, Akka Technologies, IBM Corporation, Capgemini SE, Tata Consultancy Services, Wipro, Accenture, Cognizant, Infosys, and Tech Mahindra. Companies are focusing on mergers, acquisitions, and strategic partnerships to strengthen their AI, cloud, and IoT portfolios.

Recent Industry Developments:

• June 2025: AB Volvo selected Tata Technologies as a strategic engineering partner for software-defined vehicle programs.
• March 2025: Wipro Limited restructured operations to enhance AI and cloud engineering capabilities.
• May 2024: Quest Global acquired People Tech Group, expanding its North American footprint and strengthening expertise in ADAS and digital transformation.
• March 2024: Google LLC launched the Asia Pacific Cybersecurity Engineering Center in Tokyo, underscoring the growing convergence of product engineering and cybersecurity.

Market Outlook

The global shift toward digital transformation, with 61% of C-suite executives prioritizing it as a strategic goal, underscores the enduring demand for advanced engineering solutions. As organizations embrace next-generation technologies, product engineering services will play a critical role in bridging innovation and execution—enabling companies to design, build, and scale intelligent products for the future.