ER&D services companies face headwinds, growth slowest in four fiscal years
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After an accelerated double-digit growth trajectory, companies such as KPIT Technologies, Tata Elxsi and HCLTech’s ERD business are projected to close the ongoing fiscal year with an aggregate growth rate of about 8%. This follows a curve of higher growth in FY22, FY23 and FY24 at 19.7%, 20.7% and 11.8%, respectively, according to data and information platform EIIRTrend.
A large part of the dent is because of increasing costs, competition and regulatory changes reducing client spends impacting the automotive manufacturing sector in key European regions, industry experts said.
To be sure, the growth has decelerated from a larger base and continues to be higher than the average growth rate of overall IT services.
“Quarterly data may vary, but yearly, we can say FY25 will be slowest in the last four years,” said Pareekh Jain, outsourcing expert and CEO of EIIRTrend.
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