India's mid-sized information technology (IT) services firms, earning $1-2 billion in revenue, are cumulatively expected to turn in more new business than their larger peers this fiscal, for the first time ever. The growth hack is simple: acquisitions.
Their acquisitions are only seen expanding from their current aggressive pace. The country's IT mid-caps are expected to acquire more companies than their larger peers to scale quicker, as the rise of automation raises concerns regarding their relevance and threatens to eat into their revenue, at least three industry experts said.
Three of the country’s six mid-sized IT services companies—including Coforge Ltd, Mphasis Ltd and Hexaware Technologies Ltd—closed three acquisitions in the April-June 2026 period and are expected to add $647 million in new business through buyouts in FY27. This is almost three-fifths of the $1.16 billion in incremental revenue they earned over the last fiscal year. The other firms in the $1-2 billion revenue space are Persistent Systems Ltd, Sonata Software Ltd and Firstsource Solutions Ltd.
In comparison, the acquisition volumes and the revenues the buyouts are set to fetch for five—Tata Consultancy Services Ltd, Infosys Ltd, HCL Technologies Ltd, Wipro Ltd, and Tech Mahindra Ltd—of the six largest firms seem muted so far. This year, Wipro is expected to add $136 million through its acquisition of Singapore-based Mindsprint, Olam Group's IT arm. Infosys is likely to add $319 million from its acquisitions of Florida-based Optimum Healthcare and New Jersey-based Stratus that serves the insurance sector. On the other hand, the sixth-largest firm LTM Ltd is expected to complete the acquisition of Randstad’s technology and consulting business in France, Germany, Belgium, Luxembourg and Australia by September, for which it paid $186 million. On completion, this is expected to add $500 million to LTM's annual revenue. The top six firms had collectively added $1.9 billion in incremental revenue last fiscal year.
Unless the top firms announce additional acquisitions, the mid-caps will outpace them in acquisition-led revenue addition this fiscal year, at least three analysts believe.
"This is the year for mid-cap IT services firms, as they are expected to double down on acquisitions more than what we can expect from their larger peers," said Amit Chandra, vice-president of HDFC Securities.
Deal momentum
Much of the mid-cap momentum so far has come from Coforge. In December last year, the Noida-based company acquired California-headquartered data analytics firm Encora for $2.39 billion, with the acquisition expected to contribute roughly $630 million in additional revenue this fiscal alone. The deal is expected to help Coforge achieve about $2.5 billion in annual revenue.
In April, Mphasis bought Theory and Practice Business Intelligence Inc, a Vancouver-based data analytics firm, for $14 million. And last month, Hexaware Technologies closed its roughly $15 million acquisition of Consulting Professionals Services Holdings, a UK-based technology consulting firm. Together, the two acquisitions are expected to add about $17 million in revenue.
Coforge, Mphasis and Hexaware ended last fiscal with revenue of $1.87 billion, $1.8 billion and $1.54 billion, respectively, growing 29%, 7% and 8% from the previous year. To be sure, Hexaware follows a January-December calendar.
Rank reshuffle
Mid-caps' buyout-driven incremental revenue gap could widen further if Persistent Systems completes what would become its largest acquisition.
On 27 June, the Pune-based company announced plans to acquire Munich-headquartered digital engineering firm Nagarro for a proposed $1.3 billion. Once completed, the deal would create a combined $2.9 billion company operating as the Persistent-Nagarro Group and propel Persistent above Coforge and Mphasis to become India's seventh-largest IT services company.
Persistent had ended FY26 with a revenue of $1.65 billion, up 17%, while Nagarro reported $999 million last year, up 2.8%. Nagarro follows the January-December financial year, unlike India's IT firms that have an April-March fiscal.
If successful, the acquisition would mark the second major reshuffle in India's IT hierarchy driven by M&As. The merger of LTI Infotech and Mindtree in 2022 had created LTIMindtree, now India's sixth-largest IT services company, while Coforge's acquisition of Encora cemented its position as the seventh-largest player.
The deal frenzy underscores an increasingly aggressive growth strategy among mid-cap IT firms.
Over the past eight months, Coforge and Persistent Systems have announced the largest acquisitions in Indian IT history, reinforcing analysts' expectations that mid-caps could outgrow larger rivals through the acquisition route.
As HDFC Securities’ Chandra said, large acquisitions are a guaranteed and quick way to scale amid the AI-led demand.
Analysts also expect the large caps to miss the full-year guidance they laid out in April after Accenture fell short of expectations due to fewer order wins.
A double whammy of artificial intelligence (AI)-led fears and geopolitical tensions in West Asia has dampened investor sentiment, which has led analysts to believe that the big five may grow slower in the current fiscal.
However, the mid-cap momentum cannot be described as entirely acquisition-driven. Mid-sized IT firms have consistently outgrown their larger peers over the past two years. In FY26, Infosys, HCLTech and Tech Mahindra reported revenue growth of 4.6%, 6% and 1.9%, respectively, while TCS and Wipro posted declines of 0.5% and 0.3%. By contrast, India's mid-sized IT firms recorded revenue growth of up to 30% on a full-year basis.
"2026 could well be the year when some mid-sized IT services firms add more visible incremental revenue than the large caps, but we need to be clear that this is being driven more by inorganic scale creation than by a broad-based demand recovery," said Phil Fersht, chief executive of HFS Research.
Capital flexibility
Analysts said a key advantage for mid-caps is their greater flexibility in deploying capital. While India's largest IT firms have spent over $5 billion on acquisitions over the past 18 months, they remain constrained by shareholder payout commitments.
"Mid-caps are expected to add more incremental, primarily AI-led revenue than their larger peers mainly because they can deploy all of their cash generated towards large acquisitions, while large-cap peers have fixed capital allocation policies, with specific allocation towards capital returns to shareholders via dividends and buybacks," said Sushovon Nayak, lead IT analyst at Anand Rathi Institutional Equities. He said large IT firms return nearly four-fifths of their cash to shareholders through dividends and buybacks. Mid-caps do not have a fixed capital allocation policy.
The mid-sized firms' race for scale comes amid intensified competition from global rivals.
Large IT companies, including Accenture Plc, are increasingly targeting mid-market clients with an annual revenue of $300 million-$3 billion—a segment that has traditionally been the sweet spot for India's mid-sized IT services firms.