The majority of dents are because increased costs, competition and regulatory changes will affect the auto manufacturing sector in major European regions by reducing client spending, industry experts said .
Certainly, growth has slowed from larger bases and continues to be above average growth rates across IT services.
“Although quarterly data may vary, each year, FY25 is the slowest in the last four years,” said Pareeekh Jain, outsourcing expert and CEO at Eiirtrend.
Jain cited this because it had a negative impact on the automobile, manufacturing and telecommunications industries.
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ER&D accounts for about a quarter of the $254 worth of software exported from India each year. According to Hansa Iyengar, an independent analyst in IT and Technology Services, there is a overlap between engineering services and services around engineering services and artificial intelligence (AI) like emerging technologies. Cannibalizes ER&D’s revenue to some extent. But other than that, the segments look robust enough.
“The decline in growth rate is probably due to growth from higher bases (usually growth from lower bases is spectacular), but all reports show that segments appear to be growing at 15-19%+ ” she said.
This data is reflected in the latest revenue numbers for the third quarter, which ended December 2024, reported by the engineering company over the past few weeks.
At HCLTech, India’s third largest IT giant, engineering and R&D services increased 1.1% year-on-year in Q3FY25 compared to 4.3% growth in the last quarter. However, it increased 5.4% in the third quarter.
Hcltech Chief C Vijayakumar pointed to the ongoing challenges in the European automotive sector.
“In engineering services, we are seeing decent momentum as new integrated sales organizations are fully operational. Europe continues to be challenged, but in the automotive sector, there are several globally There’s a good win,” Vijayakumar said in a call from an analyst after the revenue.
ettechMost industry executives are under pressure to resonate with the sentiment of the mobility industry in the region, particularly the automobile challenges, and keep up with recent changes in regulations, increased vehicle costs and changes in consumer preferences.
KPIT Technology (KPIT), a medium-sized company mainly for automobiles, has also slowed its pace of growth.
Kpit said that a slowdown in the US and Europe core regions, along with a low rupee depreciation against other currencies, led to a sequential growth, with both revenue and profit falling by 1.3% and 8.2%, respectively.
“The European market must compete with the Chinese at the cost of the Chinese market. This is their important market and really affects their sales. KPIT founder, CEO, MD Kishor Patil of “The overall sales of vehicles, especially passenger cars, will flatten or go down a little. It really puts pressure on their margins. I’ll put it on.”
In the September quarter, KPIT’s major geography Europe and the UK fell quarterly since the outbreak of Covid-19 with revenue shares of over 40%.
Smaller player Tata Elxsi recorded a 3.6% decline in net profit at 199 crores and a 13.3% decline in net profit. Revenues rose 2.7% year-on-year, but gradually fell 1.7% to 939.2 crores.
“The automotive industry has seen key business challenges over the past few months, using OEMS, particularly in the US and Europe, reporting sales and growth challenges in key markets. Tata Elxsi’s CEO and MD Manoj Raghavan said: But the company is seeing positive signs from Japan, India, the world, and even the US.
“It’s something we have to wait whether that growth will overcome all sorts of slowness we’ve seen in Europe,” Raghavan added.
Incidentally, in the 2025-26 economic survey released by the government on January 31, India’s ER&D Global Capacity Centre (GCC) has grown 1.3 times faster than the overall GCC setup, and is a highly valuable task. It’s there. Part of revenue sharing.
However, last year, BCG’s report was set to significantly increase global investment in the ER&D space within the automotive sector, with annual growth rates of 8-9% expected through 2030. I pointed out that. It focuses on digital engineering, sustainability and AI, with $460 billion and $540 billion.
