The engineering software market is predicted to grow at a compound annual growth rate (CAGR) of 19.5% during the forecast period of 2024 to 2032. The market will be driven by the increasing use of cloud-based solutions, developments in Industry 4.0 technologies, and the increased emphasis on digital transformation in a variety of industries. The market offers significant growth opportunities despite the obstacles brought on by the high cost and complexity of implementation, especially in regions like Asia-Pacific where the adoption of engineering software is being driven by rapid economic growth and rising demand for advanced engineering solutions. The software segment produced the most revenue in 2023, according to a thorough study of market segmentation by component. During the forecast period, the services sector is anticipated to grow at the highest rate. The market leader in terms of deployment in 2023 was the On-premises sector; however, from 2024 to 2032, the Cloud segment is expected to grow at the fastest rate. Geographic patterns show that North America was the region with the largest revenue in 2023 and that the Asia-Pacific area would have the highest compound annual growth rate (CAGR) for the projected period. Key businesses including Autodesk, Siemens, Dassault Systemes, PTC, and Bentley Systems are present in the competitive landscape and are implementing strategic initiatives to solidify their market positions. The demand for sophisticated and dependable engineering software solutions is anticipated to stay high during the projected period, propelling market expansion as companies continue to innovate and adopt new technologies.

Market Drivers

Growing Cloud-Based Solution Adoption

The market for engineering software is primarily driven by the growing popularity of cloud-based solutions. Cloud computing is a desirable alternative for companies of all sizes because of its many benefits, which include cost-effectiveness, scalability, and flexibility. Cloud-based engineering software solutions saw a sharp rise in usage in 2023 as businesses looked to improve their operations by utilizing cloud infrastructure. For example, Autodesk, a major player in the engineering software market, announced a significant increase in the number of people subscribing to its cloud-based solutions, including AutoCAD and Revit. This increase can be attributed to the increased need for remote collaboration and mobile access to design tools. The utilization of cloud-based engineering software facilitates smooth team collaboration, enhances data accessibility, and minimizes the requirement for costly on-premises equipment. It also gives businesses the flexibility to grow their operations in response to demand, making it an affordable way to handle technical duties. Predictive analytics and automated decision-making are made possible by the continued enhancement of cloud-based solutions' capabilities through their integration with other technologies like AI and ML. Over the projection period of 2024 to 2032, this trend is predicted to continue, with the cloud segment expected to grow at the fastest rate because of continuous digital transformation projects and an increasing reliance on cloud infrastructure across a range of industries. The need for increased collaboration, cost savings, and operational efficiency is driving the market for engineering software with a shift toward cloud-based solutions.

The emergence of Industry 4.0

The engineering software market is also being driven by the emergence of Industry 4.0, which is defined by the use of digital technology in industrial and manufacturing processes. Industry 4.0 is a collection of technologies that are revolutionizing several industries, such as artificial intelligence (AI), machine learning (ML), big data analytics, and the Internet of Things (IoT). Industry 4.0 technology adoption increased significantly in 2023, which increased the need for sophisticated engineering software solutions that facilitate automation and smart manufacturing. Leading engineering software provider Siemens announced a notable increase in the use of its Industry 4.0 products, including Siemens Digital Industries Software, as a result of the demand for intelligent and effective production processes. Engineering software is essential to Industry 4.0 deployment because it makes complicated system design and simulation possible, optimizes manufacturing processes, and enhances product quality. Predictive maintenance, real-time monitoring, and automated decision-making are made possible by the incorporation of AI and ML algorithms into engineering software, which improves overall operational efficiency. The need for sophisticated engineering software solutions is also fueled by the emergence of smart factories and the growing application of digital twins, which are virtual equivalents of actual assets. The need for engineering software is anticipated to increase as industries continue to adopt Industry 4.0 technologies, which will support the market's growth during the projected period.

Stressing the Digital Revolution

One of the main factors propelling the engineering software market is the increasing focus on digital transformation in several industries. Integrating digital technologies into every facet of a business is known as "digital transformation," which radically alters how organizations run and provide value to their clients. Businesses from a variety of industries, such as aerospace, electronics, automotive, and construction, have embraced digital transformation projects more and more in 2023 to remain competitive and adapt to changing consumer needs. Engineering software, which offers the instruments and functionalities needed to digitize design and production processes, is a vital enabler of digital transformation. For example, the demand for digital continuity and cooperation throughout the product lifecycle has led to a notable increase in the adoption of Dassault Systemes' 3DEXPERIENCE platform, according to the top provider of engineering software. Engineering software solutions help businesses optimize their processes and shorten time-to-market by making it easier to create digital models, simulations, and analyses. By eliminating the need for physical prototypes and cutting expenses, designs can be tested and validated in a virtual setting with the use of digital twins and virtual simulations. Furthermore, data-driven decision-making and predictive analytics are made possible by the incorporation of AI and ML technologies into engineering software, which increases operational efficiency even more. The market for engineering software is anticipated to develop during the projected period as a result of the continued digital transformation initiatives and the growing reliance on digital technology.

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Restraint

High Software Cost and Difficulty of Implementation

Engineering software has many advantages and advances, but the market is confronted with obstacles because of the high cost and difficulty of implementation. The adoption of engineering software solutions by small and medium-sized organizations (SMEs) is hindered by their high cost, especially when it comes to sophisticated features and interconnections. Several organizations reported having trouble in 2023 defending the high initial and recurring subscription charges of engineering software. The requirement for specialized gear, support, and training raises the implementation's total cost. Moreover, for businesses without the requisite knowledge or resources, the complexity of developing software, especially for solutions integrating several technologies like AI, ML, and IoT, can be overwhelming. Engineering software configuration, customization, and integration with current systems call for highly qualified workers with extensive technical understanding. Several businesses cited difficulties in 2023 implementing and overseeing engineering software systems because of a shortage of qualified personnel and the intricacy of the technology. The adoption of engineering software may be hampered by these issues, especially in SMEs with tight budgets and little technical resources. Vendors are concentrating on creating affordable, user-friendly solutions with streamlined interfaces and robust support services to tackle these issues. The high cost and complexity of implementation, however, are expected to impede the expansion of the engineering software market until these issues are fully resolved, especially in areas and sectors with limited access to trained labor and capital.

Market -by-Component

Software and Services are the two-component segments of the engineering software market. Due to the broad use of engineering software solutions across a variety of industries, the Software segment produced the most revenue in 2023. Engineering software is a vital part of contemporary engineering processes because it offers the tools and capabilities required to design, simulate, analyze, and manage engineering projects. Prominent providers like Siemens, Autodesk, Dassault Systemes, and PTC provide a wide range of engineering software solutions for many applications and sectors. The growing need for engineering tasks to be automated, digitalized, and optimized is propelling the use of engineering software and generating substantial income. AEC (architecture, engineering, and construction) industries are increasingly adopting Autodesk's AutoCAD and Revit platforms, which has resulted in significant revenue growth for the company in 2023. Services, on the other hand, are predicted to grow at the fastest rate between 2024 and 2032. The demand for professional services, such as consulting, training, support, and implementation services, is being driven by the expanding complexity of engineering projects and the requirement for specialized skills. More and more engineering software providers are providing a range of services to assist businesses in properly implementing and maintaining their software solutions, guaranteeing peak performance and productivity. To assist enterprises in navigating the complexity of engineering software, top service providers like IBM, HPE, and Accenture provide a range of engineering services, such as project management, system integration, and custom development. The Services section is anticipated to develop at the fastest rate throughout the projection period due to the growing reliance on managed services and the demand for specialized knowledge in engineering jobs. The market is expanding due to the increased demand for engineering services brought about by the emphasis on improving operational efficiency, minimizing downtime, and guaranteeing optimal performance.

Market by Deployment

By deployment type, the engineering software market is divided into cloud and on-premises segments. Because on-premises solutions are still preferred in sectors with strict security and compliance requirements, the On-premises segment earned the largest revenue in 2023. For sectors where data security is crucial, like aerospace and defense, healthcare, and government, on-premises engineering software solutions provide more control over data and infrastructure. Prominent suppliers like Siemens, Dassault Systemes, and PTC provide strong on-premises engineering software solutions tailored to these sectors' particular requirements. Due to the growing need for safe and legal software in vital industries, Siemens recorded a notable increase in income from its on-premises engineering software solutions in 2023. However, the market category anticipated to experience the highest CAGR between 2024 and 2032 is cloud computing. The trend towards cloud-based engineering software is being driven by the expanding use of cloud computing and the rising need for flexible and scalable software solutions. Cloud-based solutions are an appealing choice for companies of all sizes due to their many benefits, which include cost-effectiveness, scalability, and remote accessibility. Predictive analytics and automated decision-making are made possible by the combination of cloud-based engineering software with other technologies like artificial intelligence and machine learning. Leading suppliers of cloud-based engineering software, including Autodesk, Dassault Systemes, and Bentley Systems, reported significant increases in adoption in 2023. These increases were fueled by the growing need for online collaboration and remote access to design tools. Cloud-based engineering software is predicted to see the highest CAGR over the projection period due to the continued digital transformation initiatives and the growing reliance on cloud infrastructure across various sectors. The need for increased collaboration, cost savings, and operational efficiency is driving the market for engineering software with a shift toward cloud-based solutions.

Market by Use

The market for engineering software is divided into five application categories: drafting and 3D modeling, plant design, design automation, product design and testing, and others. The growing need for software solutions that facilitate the design, simulation, and testing of goods across several industries led to the largest revenue generation in 2023 for the Product Design & Testing category. Software for product design and testing offers the resources required to develop, verify, and improve designs, guaranteeing the functionality and quality of the final product. Prominent suppliers like PTC, Siemens, and Dassault Systemes provide extensive testing and product design solutions for a range of applications and sectors. The increasing use of Dassault Systemes' CATIA and SIMULIA platforms in the automotive, aerospace, and electronics industries is what drove the company's notable revenue growth in 2023 from its product design and testing solutions. Nonetheless, Drafting & 3D Modelling is predicted to see the highest CAGR throughout the projected period of 2024 to 2032. The market for drafting and 3D modeling software is being driven by the rising need for precise and comprehensive 3D models as well as the expanding use of additive manufacturing and 3D printing technologies. The ability to develop accurate and detailed designs with the aid of drafting and 3D modeling software facilitates efficient manufacturing processes and lessens the need for physical prototypes. Prominent suppliers like Autodesk, Bentley Systems, and Trimble provide sophisticated drafting and 3D modeling solutions for various sectors and uses. Drafting and 3D modeling software's capabilities are further enhanced by the incorporation of AI and ML technologies, which allow for automated design generation and optimization. Demand for digital twins and virtual simulations in the architectural, engineering, and construction (AEC) sectors drove a significant increase in Autodesk's drafting and 3D modeling solution adoption in 2023. Drafting and 3D modeling software demand are anticipated to rise at the fastest rate throughout the forecast period due to continuous digital transformation initiatives and growing reliance on digital technology. The market for drawing and 3D modeling software is expanding as a result of the emphasis on increasing design accuracy, cutting time-to-market, and raising product quality.

Market by Application

The Automotive, Aerospace & Defence, Electronics, Medical Devices, Architecture, Engineering, and Construction (AEC), and Other end-use segments comprise the engineering software market. Due to the widespread use of engineering software in the design, simulation, and testing of automotive systems and components, the automotive market produced the largest income in 2023. Engineering software plays a major role in the automotive industry's ability to guarantee product performance, quality, and regulatory compliance. Prominent suppliers like Siemens, Dassault Systemes, and PTC provide extensive engineering software solutions tailored to the unique requirements of the automobile sector. Siemens saw a notable increase in revenue from its engineering software solutions in 2023, which it attributed to the growing utilization of its NX and Simcenter platforms within the automobile industry. Nonetheless, the Medical Devices segment is anticipated to experience the greatest CAGR over the projected period of 2024 to 2032. To improve the design, simulation, and testing of medical devices and guarantee product safety and efficacy, the medical device industry is using engineering software more and more. The medical device industry is experiencing a surge in demand for engineering software due to the growing importance of regulatory compliance and the requirement for precise and dependable design tools. Prominent suppliers like Autodesk, Dassault Systemes, and ANSYS provide cutting-edge engineering software solutions tailored to the unique requirements of the medical device sector. Several producers of medical devices stated that they made large expenditures in engineering software solutions in 2023 to help in their efforts to comply with regulations and develop new products. The medical devices industry is predicted to have the greatest CAGR throughout the projected period due to the continued digital transformation initiatives and the growing reliance on digital technologies driving demand for engineering software. The market for engineering software is expanding as a result of increased demand brought about by the emphasis on ensuring regulatory compliance, increasing design correctness, and improving product safety.

Geographic Trends

The engineering software market's global segmentation highlights important trends and regional dynamics. Due to the widespread use of engineering software solutions in the US and Canada, North America produced the most revenue in 2023. This increase has been largely attributed to the region's focus on improving digital infrastructure, technological advancements, and the strong presence of prominent vendors. Due to large R&D investments, the United States, in particular, has been a leader in the use of engineering software. Leading technology firms like Autodesk, Siemens, and PTC, for instance, have led the way in engineering software innovation and have accelerated its adoption across a range of industries. The North American market has grown thanks in part to supportive government financing, cutting-edge technology infrastructure, and favorable regulatory framework. However, Asia-Pacific is predicted to see the greatest CAGR throughout the projected period of 2024 to 2032. The use of engineering software is being driven by rapid economic expansion, growing urbanization, and increased demand for innovative engineering solutions in nations such as China, India, Japan, and South Korea. To meet the increasing demand for digital services, governments in the Asia-Pacific region are concentrating on updating their digital infrastructure and improving technological skills. Due in part to China's massive investments in digital infrastructure as part of the Belt and Road Initiative, the region has a great growth potential. China's Ministry of Industry and Information Technology declared in 2023 that it would improve the country's digital infrastructure by using cutting-edge engineering software solutions in industrial zones and large cities. In a similar vein, India is spending heavily on digital infrastructure to facilitate economic expansion and guarantee effective connections. The need for engineering software in Asia-Pacific is being further driven by the increased focus on smart city projects and the requirement for effective engineering solutions in urban areas. Consequently, the region is anticipated to top the market in terms of development rate throughout the projected period due to the growing need for sophisticated and dependable engineering solutions to meet changing needs and obstacles.

Competitive Trends

The engineering software market is highly competitive, with many major competitors such as Autodesk, Siemens, Dassault Systemes, PTC, Bentley Systems, Altair Engineering, Inc., ANSYS, Inc., ESI Group, 3D Systems Inc., Mastercam, Hexagon AB and ZWSOFT CO., LTD. These businesses controlled the market in 2023 as a result of their broad product lines, well-known brands, and sophisticated distribution systems. With its cutting-edge engineering software solutions that were renowned for their excellent performance and dependability, Autodesk led the market. The company has improved its market position through partnerships with global cloud service providers and technology suppliers, as well as through its strategic focus on research and development. For instance, major architecture, engineering, and construction (AEC) projects in North America, Europe, and Asia-Pacific heavily rely on Autodesk's AutoCAD and Revit platforms, which generate a substantial amount of income. Another significant company, Siemens, has been emphasizing the development of its technological prowess and the expansion of its engineering software services. Siemens is a well-liked option for many engineering applications worldwide because of its NX and Simcenter platforms, which combine cutting-edge engineering tools and capabilities and are known for their effectiveness and operational flexibility. The company's robust global dominance has been reinforced by its strongholds in the automotive and aerospace sectors. Dassault Systemes has also achieved notable success in the engineering software sector with its extensive suite of products, which includes SIMULIA, CATIA, and SOLIDWORKS. With noteworthy projects in the automotive, aerospace, and electronics sectors, Dassault has established itself as a major player in the industry by emphasizing innovation and customer-centric solutions. Other significant players in the market are PTC and Bentley Systems, which concentrate on growing their footprints in emerging areas while providing a variety of cutting-edge engineering software solutions. The competitive trends show that mergers and acquisitions, strategic alliances, and major-player collaborations are becoming more and more important. These tactics are meant to open up new markets, improve technological capabilities, and diversify product offerings. For example, collaborations between cloud service providers and providers of engineering software enable the creation of tailored solutions to meet particular operational difficulties across a range of industries. The market for engineering software is predicted to remain competitive as long as there is a growing need for advanced engineering solutions. To sustain and improve their market positions, companies are expected to prioritize innovation, strategic investments, and global expansion.