Energy ESO Market

The global energy ESO market size was USD 236.46 Billion in 2022 and is likely to reach USD 1 Trillion by 2031 , expanding at a CAGR of 17.4% during 2023–2031.The growth of the market is attributed to the increasing digitization in the energy sector and growing adoption of new technology introduced by engineering service providers, such as plant digitization and virtual prototyping for smart grid management.

Energy engineering services outsourcing (ESO) refers to the practice of contracting third- party energy service providers (ESPs) to execute tasks that previously done in- house. Furthermore, ESPs are moving towards advanced and mature systems that deliver more consistent, stable, and high- quality services. This has encouraged businesses to choose energy ESO as a way to cut personnel and investment costs by outsourcing services to ESPs.

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Moreover, conceptualization, design, validation, and automation are some of tasks are undertaken by ESPs. Furthermore, this stage is known as the knowledge process outsourcing stage (KPO). This aided the companies in reducing time to the market, extending product lifecycles, and gaining access to new markets.

On the other hand, ESO encompasses a wide range of services, such as drafting, computerized- aided design, validating designs, prototype services for the manufacturing sector, simulation services, process design, testing, and implementation along with execution and reporting. Another important service that is outsourced for quality assurance of products and services is quality check and quality control.

However, the COVID-19 pandemic has impacted the energy sector by delaying the construction of new energy infrastructure and facilities due to the rising issues with equipment delivery. For example, China, the first country to be hit by the COVID-19 pandemic, is a major producer of clean energy technology such as wind turbines and solar panels. On the other hand, the pandemic has had a negative impact on the delivery and installation of energy- related equipment for renewable energy enterprises, resulting in lower demand for engineering services.

Market Trends, Drivers, Restraints, and Opportunities

• Rising urbanization and growing demand for energy are some of the major factors propelling the market growth during the forecast period.

• Increasing need for energy plants' operating efficiency and the growing investments in renewable and clean energy resources are estimated to boost the market expansion in the coming years.

• Growing implementation of big data, analytics and increasing usage of sensors along with rapid adoption of Internet of Things (IoT) in various business verticals are fueling the market growth.

• Increasing Intellectual Property (IP) and security threats are key restraining factors challenging the market growth.

• Rising adoption of modernized engineering technology by outsourcing organizations to empower their clients to exchange confidential data on specific projects and equipment performance is anticipated to provide immense opportunity for market during the forecast period.

Scope of the Report

The report on the global energy ESO market includes an assessment of the market, trends, segments, and regional markets. Overview and dynamics have also been included in the report.

Market Segment Insights

Onshore segment is expected to grow at a rapid pace

Based on locations, the global energy ESO market is bifurcated into offshore and onshore. The onshore segment is expected to grow at a rapid pace during the forecast period, owing to the increasing concerns related to information security and privacy. Furthermore, onshore services are offered by an ESO vendor to original equipment manufacturer (OEM) based in the same nation. In addition, demographic variables such as language, communication, and working in the same time zone are expected to up surge the segment growth.

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However, the offshore segment is projected to register a substantial growth in the coming years due to the cost- effective advantage. Furthermore, organizations are eager to migrate away from traditional noncore outsourcing and moving towards offshoring core activities. Thus, all these factors are fueling the segment growth.

Non- renewable segment is projected to expand at a considerable CAGR

On the basis of sources, the market is segmented into chemical processing, renewable source, and non-renewable source. The non- renewable segment is projected to expand at a considerable CAGR during the forecast period due to the abundance of natural gas resources, which include shale gas, tight gas, and coalbed methane supplies. Furthermore, fossil fuels, such as natural gas, coal, and petroleum, make up the majority of nonrenewable energy sources.

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However, the renewable segment is anticipated to expand significantly in the coming years, owing to the growing awareness along with increasing concerns of environmental protection. Furthermore, increasing global economy along with growing industrialization resulted in a significant increase in energy demand in the coming years. On the other hand, meeting rising energy demand and reducing greenhouse gas emissions, cleaner energy sources are critical for environmental protection. Thus, all these factors are expected to boost segment growth.

Structure & layout segment is projected to gain a large revenue share

Based on services, the global energy ESO market is segregated as implementation & maintenance, R&D and designing, digitization, and structuring & layout. The structure & layout segment is projected to gain a large revenue share during the forecast period, owing to the growing concerns related to the operating efficiency of energy plants.

Furthermore, construction and equipment procurement are part of the structural & layout process. Engineering service providers offer structure and layout for a significant infrastructure projects, such as mining, solar, oil and gas, wind plants, and hydroelectric. Hence, it is estimated to fuel the segment growth in the coming years.

However, the implementation & maintenance segment is expected to grow considerably in the coming years due to the better post- construction services, such as equipment repair, operational support, and other upgrade services.  Furthermore, engineering service providers offer OEMs with implementation & maintenance services for any concerns involving operations or project needs modifications. In addition, the availability of installation and maintenance services is increasingly becoming a key distinction among engineering service providers. Additionally, ESPs are focusing on providing OEMs with ongoing support services.

On the other hand, the R&D and designing segment is anticipated to grow at a substantial CAGR during the forecast period due to the growing demand for real-time analytics services to meet the needs of the energy industry, such as evaluating massive volumes of data created in energy generation and receiving real-time feedback from smart grids.

Asia Pacific is anticipated to constitute a key market share

In terms of regions, the market is classified as Asia Pacific, North America, Latin America, Europe, and Middle East & Africa. Asia Pacific is anticipated to constitute a key market share during the forecast period, owing to the favorable government rules & regulations in countries, such as India, Japan, and China, availability of skilled personnel, and cost-effective labor for outsourcing activities. In addition, growing investments in clean energy sources are fueling the market in the region.

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However, the market of middle east and Africa is estimated to gain a large revenue share in the coming years due to the rising use of solar energy. Furthermore, growing energy sector investments are pushing the regional market expansion. According to the Middle East Solar Industry Association (MESIA), energy investment in the Middle East and North Africa (MENA) area is projected to exceed USD 1 trillion by 2023.

On the other hand, North America is expected to register a substantial market share during the forecast period, owing to the growing investment in renewable energy sources. Furthermore, the early stage adoption of modern technology in the energy sector is projected to boost the market in the region.

Segments

Locations

• Offshore
• Onshore

Sources

• Chemical Processing
• Renewable Source
• Non-renewable Source

Services

• Implementation & Maintenance
• R&D and Designing
• Digitization
• Structuring & Layout

Regions

• Asia Pacific
• North America
• Latin America
• Europe
• Middle East & Africa

Key Players

• Total OutSource, Inc.
• Altair Engineering, Inc.
• STAS Engineering
• ALTEN Group
• Semcon
• ALTRAN
• Assystem
• Segula Technologies
• Rilco Engineering Services
• Cyient
• ESI Group
• QuEST Global Services Pte. Ltd.
• LUXOFT
• Mott Macdonald.

Competitive Landscape

Some of the key players competing in the global energy ESO market are Total OutSource, Inc.; Altair Engineering, Inc.; STAS Engineering; ALTEN Group; Semcon; ALTRAN; Assystem; Segula Technologies; Rilco Engineering Services; Cyient; ESI Group; QuEST Global Services Pte. Ltd.; LUXOFT; and Mott Macdonald.

These key players are actively engaging in marketing strategies, such as mergers & acquisitions, partnership & collaboration and new product development in order to grow their commercial footprint and maintain a competitive business climate in the industry.

For example, in 2017, Altran Engineering has purchased Aricent, a U.S. based design and engineering service company, through its subsidiary Altran U.S. Altran Engineering is expected to take advantage of new prospects and emerging demands in the region with this acquisition.

Virtual testing technology for windmill operations is available from ESI Group, a French developer of virtual prototyping solutions. On the other hand, Altair Engineering, Inc., a provider of industrial design, analytics solutions, and product engineering based in the United States, provides IoT enabled digital transformation services for the energy outsourcing organizations.