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Why Automotive Companies Outsource Software Development

The future of mobility promises seamless, automated, and personalized experience. Modern automobiles are equipped with numerous digital solutions making them convenient to use, safe to drive, and smart. Due to digitization, the cost of creating and manufacturing a new car model has enormously increased. The automotive manufacturers and suppliers must keep pace with the increasing vehicle complexity: electric drives, autonomous driving, Car2X, 5G, interaction with the car, and remote control. As a result of the expanded capability, automotive companies have to re-organize and supervise the integration of software (IT backend, networking, and infrastructure) and hardware into cars.

Moreover, they have to keep up with the competitors and shorten new car release life cycles as well as react rapidly to ever-changing consumer expectations. It requires manufacturing companies to be flexible and innovative.

outsourcing software development

Today’s automotive sector is driven more by software trends rather than hardware. Lines of code can be found even in the simplest hardware component and as software development continues to advance at a rapid pace, automotive companies are becoming increasingly reliant on digital technologies. Most automotive companies appeared to be not ready to switch to innovative software solutions development pretty fast, lacking needed experts and infrastructure in-house.  Thus, outsourcing software development has become a good practice among automotive companies. It allows them to implement digital solutions faster while increasing automotive reliability, boosting performance, and improving the driving experience.

Reasons Automotive Companies Outsource IT Services

Modern automotive companies find themselves dependent on digital technologies. To succeed in the competitive market, they should use state-of-the-art software to improve the production process as well as ensure an excellent user experience for drivers.

While most automotive companies are quite successful, it’s no easy task to set up a software development team in-house and find specialists with relevant expertise. This is where software outsourcing can help automotive companies put their ideas into action.

Below are the benefits that enforce automotive companies to outsource software development:

  • improved customer satisfaction;
  • cost-efficiency of team setup;
  • improved productivity of workers;
  • increased safety of vehicles;
  • staying on top of the market trends.

The more advanced technology is, the more likely that something goes wrong. That’s why hiring a professional dedicated development team from an outsourcing company is crucial.

Services That Can Be Outsourced in the Automotive Industry

There’s a wide variety of IT services entrusted to outsourcing companies in the automotive industry. We’ll look into the current state of four popular software development solutions in the industry.

Embedded Solutions

In the coming years, the demand for embedded systems in the automotive industry is expected to increase. On the one hand, it’s fuelled by the demand for accompanying them by embedded graphics, but on the other hand, automobile manufacturers are trying their best to make automobiles and automobile devices more power-efficient and smarter. This means an active usage of embedded software and hardware in the automobile industry. GPS, fuel injection systems, parking sensors, airbags, and anti-locking breakage systems are among the key examples of how embedded solutions are used in vehicles’ portable computing devices.

software outsourcing

The Internet of Things (IoT) has a substantial impact on vehicle-connected devices. The technology has enabled automotive companies to integrate brand new equipment and innovations in their vehicles, including Near Field Communication payment, image recognition, embedded sensors, etc.

This automotive industry is a highly competitive landscape and the battle for market share is fierce, so automotive companies must invest in research and development to keep up with their competitors.

Process Automation Software

Automation technologies such as Artificial Intelligence and Machine Learning aren’t anything new to automotive companies. Due to the integration of smart automation technologies, robots can now perform complex tasks and accomplish them several times faster than human workers who fulfill them manually. The automated task execution also means jobs performed with more precision and increased productivity. However, process automation is used to optimize manufacturing but also enhance end users’ experience. Below are some of the examples of process automation software that can be outsourced in the automotive industry:

  • Machine vision. Vehicle manufacturers can use the technology to ensure an automated internal machine inspection. For example, smart cameras capture images that are analyzed and processed by special analysis software to provide real-time insight into how different automobile components operate.
  • Collaborative robots (Cobots). These types of robots help technicians to handle a large part of their job. They enable the performance of specific functions at once. Cobots are an excellent way to speed up manufacturing and improve the overall productivity wor workers.
  • AI-powered software for driverless cars. This powerful innovation has changed the way we drive cars. AI works by using internal maps, processing the inputs, generating the most plausible trajectory, and sending the required instructions to the vehicle’s actuators.

Enterprise Mobility

Automotive companies are rapidly adopting mobile solutions to enhance business processes. Mobility is the primary objective for the automotive sector, and car manufacturers aren’t an exception. Mobile solutions in the automotive sector bring competitive benefits across all divisions, ranging from production lines to logistics and inventory management. The most popular solutions among automotive companies are applications aimed at production line automation and maintenance.

All in all, automobile manufacturers use mobile solutions when they need to:

  • transmit data more efficiently within an enterprise;
  • make operations more transparent for all divisions;
  • predict the delivery time and get information in real-time;
  • enhance accuracy and minimize human errors.

Dealer Management Systems

Vehicle production is not the only segment of the automotive industry where software development services are outsourced. The distribution of automobiles requires software development, too. So, the development of dealer management systems is among the services that are typically outsourced to reliable software development companies.

it outsourcing

Dealerships are still an important part of the supply chain landscape. According to a survey by EY, even in 2025. 58% of the respondents will still choose a traditional dealership over other channels to buy a new vehicle. Though dealer management systems aren’t, they require a significant transformation to stay relevant to modern market trends. Among the trends that may contribute to the growing demand for outsourcing DMS development are as follows:

  • New DMSs should be connected to IoT sensors so that dealers can leverage the data received, including actual mileage, performance, issues, etc.
  • They need to be more flexible to accommodate new stakeholders in the existing supply chain.
  • The necessity for non-stop access from any geographical location will encourage dealers to create more mobile solutions.
  • It’s expected that Next-Gen DMSs should go to the market faster to provide dealers with advantages over their competitors as early as possible.

What Technologies Are Used in the Automotive Industry?

  • VR and AR solutions are among the industry trends with their diverse capabilities. For example, simulation-based training is used for testing the vehicle’s performance. Manufacturers can also construct a virtual assembly line to design the process before applying it into practice. They can also design new engines and visualize whether new components will fit the existing system.
  • The Internet of Things is another example of innovative technologies used in the industry. Some of the real-life cases are connected car solutions, Advanced Driver-Assistance Systems (ADAS), navigation and telematics solutions, predictive maintenance solutions, etc
  • Artificial Intelligence and Machine Learning are also integrated into automotive software. Autonomous vehicles are based on these technologies. AI-powered systems can also make production lines more efficient and help with predicting machine failure with ML models.

Summary

The amount of innovative technologies that are fueling the automotive sector is just overwhelming. Companies need to focus on connecting hardware and software to build a market competitive vehicle. While the automotive industry is continuously changing, some manufacturers seriously lack the technical expertise to bring innovations to life or simply can’t afford to build an R&D department in-house. Thus, automobile manufacturers turn to software development outsourcing providers to accelerate the development of innovative solutions.

Developing a model for predicting the success of an outsourced project based on a vendor’s competency assessment will ensure a positive experience and provide a key to technological advantage and the ability to adapt to the rapidly changing customer demand and disruptive industry changes.

Author Bio

Victoria Puzhevich Lead Business Development Specialist
Victoria has over 15 years of experience in IT, keeping track of the current and future trends in the sphere, sharing expert advice and relevant industry experience.

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