Automation services: More outsourcing, double-digit growth

The fastest growing segment of the automation market is services, according to a recent report from ARC Advisory Group.

08/21/2007


Dedham, MA —The fastest growing segment of the automation market is services, according to a recent report from

ARC Advisory Group

. “Automation Supplier Provided Services Worldwide Outlook,” a five-year market analysis and technology forecast through 2011, finds that many automation services that are required throughout the lifecycle of a plant or factory no longer can be performed in-house by manufacturers.

Users increasingly depend on suppliers that offer more value-added services. Among the findings: labor has become a global issue driving outsourcing and services growth, and suppliers need to bring vertical industry expertise to their service offerings. Additionally, the influx of less experienced workers into the world of automation and manufacturing is spurring extremely high growth in training segments, with suppliers and users stepping in to fill the need.

The study reports that the worldwide market for services approached $14 billion (year-end 2006). It is predicted to increase by more than $10 billion over the next five years, reaching $24.9 billion in 2011, representing a compound annual growth rate of 12.3%.

“The impetus for the study,” says ARC’s Larry O’Brien, research director for process industries, “was that we saw services rapidly growing business in the automation marketplace.” He adds, “There’s a resource crunch as a lot of people retire; approximately 60% of oil and gas engineers will retire by 2010; there’s dwindling staff. So who do users look to now?”

Another factor is the growth of the marketplace. ABB tops the automation service market share worldwide. Siemens and Honeywell come in next. Other key players are active as well, including Rockwell Automation, which told Control Engineering that its services business is “rapidly growing,” at number six worldwide and number two in North America.

While project services and other traditional services were in strong demand, services provided during the operational phase of the plant, such as asset management, condition monitoring, loop tuning, performance management, and overall maintenance outsourcing, contributed to overall market growth. Market shares of leading suppliers, notes the study, are driven by suppliers’ strength in process automation.

Mature markets such as North America and Europe, the Middle East, and Africa constitute the bulk of the market for automation services, but revenue growth will be concentrated in the developing economies of China, the rest of Asia, and Latin America.

The study recommends that users consider automation suppliers to fill the list of skills gaps and as training and education providers. They should also consider suppliers as main automation contractors or main instrumentation vendors (MAC / MIV) for new projects.

—Edited by Barb Axelson, contributing editor
Control Engineering Weekly News

(Register here and scroll down to select your choice of eNewsletters free.)





No comments
The Engineers' Choice Awards highlight some of the best new control, instrumentation and automation products as chosen by...
Each year, a panel of Control Engineering editors and industry expert judges select the System Integrator of the Year Award winners.
The Engineering Leaders Under 40 program identifies and gives recognition to young engineers who...
Learn how to increase device reliability in harsh environments and decrease unplanned system downtime.
This eGuide contains a series of articles and videos that considers theoretical and practical; immediate needs and a look into the future.
Learn how to create value with re-use; gain productivity with lean automation and connectivity, and optimize panel design and construction.
Go deep: Automation tackles offshore oil challenges; Ethernet advice; Wireless robotics; Product exclusives; Digital edition exclusives
Lost in the gray scale? How to get effective HMIs; Best practices: Integrate old and new wireless systems; Smart software, networks; Service provider certifications
Fixing PID: Part 2: Tweaking controller strategy; Machine safety networks; Salary survey and career advice; Smart I/O architecture; Product exclusives
The Ask Control Engineering blog covers all aspects of automation, including motors, drives, sensors, motion control, machine control, and embedded systems.
Look at the basics of industrial wireless technologies, wireless concepts, wireless standards, and wireless best practices with Daniel E. Capano of Diversified Technical Services Inc.
Join this ongoing discussion of machine guarding topics, including solutions assessments, regulatory compliance, gap analysis...
This is a blog from the trenches – written by engineers who are implementing and upgrading control systems every day across every industry.
IMS Research, recently acquired by IHS Inc., is a leading independent supplier of market research and consultancy to the global electronics industry.

Find and connect with the most suitable service provider for your unique application. Start searching the Global System Integrator Database Now!

Case Study Database

Case Study Database

Get more exposure for your case study by uploading it to the Control Engineering case study database, where end-users can identify relevant solutions and explore what the experts are doing to effectively implement a variety of technology and productivity related projects.

These case studies provide examples of how knowledgeable solution providers have used technology, processes and people to create effective and successful implementations in real-world situations. Case studies can be completed by filling out a simple online form where you can outline the project title, abstract, and full story in 1500 words or less; upload photos, videos and a logo.

Click here to visit the Case Study Database and upload your case study.