Growth in R&D activity and increased government regulation is projected to increase demand for engineering testing services
Los Angeles, CA (PRWEB) November 10, 2014
Engineering testing services have a buyer power score of 3.4 out of 5. This score indicates moderate negotiating power for the buyer. While high product specialization, high switching costs, a lack of substitutes and growing demand negatively impacting buyer power, buyers benefit from a highly fragmented market, low supply chain and vendor financial risks and low price volatility.
In the three years to 2014, the recovering US economy has led to renewed demand for research and development (R&D) among businesses, which, in turn, has fueled an upward trend in prices for engineering testing services. The need for engineering testing services is anticipated to grow during the three years to 2017 due to new government regulations requiring businesses to adhere to stricter testing, as well as continued growth in R&D expenditures. “As a result, prices are expected to continue rising during this period, further benefiting the suppliers of engineering testing services,” according to IBISWorld business research analyst Erick Delgado.
Buyers primarily benefit from a highly fragmented market, which encourages price-based competition among vendors. However, due to the relatively low number of providers that specialize in engineering testing, vendors are able to charge a premium for their services, particularly during periods of high demand. Due to the continuing need to comply with government regulations, buyer power is generally restricted. As outsourced testing services become more popular, buyers will continue to lose negotiating power. “Moreover, the availability of substitute services is low, as buyers only have the choice to outsource or in-house their testing,” says Delgado.
Because engineering testing firms provide services across several industries, demand driver volatility has been low, which has shielded buyers from sudden price shifts. Low price volatility promotes a stable purchasing environment for buyers by allowing them to accurately budget and evaluate prices. Moreover, the diversification of services across several markets has led to low vendor financial risk. As such, buyers can expect to be more secure in negotiating long-term engineering testing contracts during the next three years. Major vendors include SGS SA, Intertek Group PLC and Bureau Veritas Group. For more information, visit IBISWorld’s Engineering Testing Services procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of engineering testing services, including analysis of physical, chemical and mechanical properties; rotating machinery and vibration; structural modeling, qualification testing and noise mitigation; nondestructive, geotechnical, thermal, calibration, electrical and electronic testing, among others. These services can be performed on-site or in a laboratory. This report excludes medical and veterinary testing.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Buying Lead Time
Key RFP Elements
Buyer Power Factors
About IBISWorld Inc.
IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.