Indian IT’s mid-tier firms are narrowing the gap with the industry’s six largest players in terms of incremental revenue, even as growth slows across the board amid AI disruption and demand uncertainty.
Coforge, Mphasis and five similar companies saw growth moderate, but the rate of decline in new business in FY26 was slower than that of the country’s six largest software exporters, which include the likes of Tata Consultancy Services (TCS) and Infosys.
Revenue trends
Together, these seven mid-tier companies, each with annual revenue between $1 billion and $2 billion, added $1.1 billion in new business in FY26, down from $1.25 billion in FY25. In comparison, the six largest firms, with annual revenue in a range of $5-30 billion, added $1.9 billion, down from $2.28 billion in FY25, according to a Mint analysis of company filings.
This suggests that mid-tier tech firms are closing the gap with larger peers in incremental business. It also indicates that these smaller firms were less affected by automation-led disruption and geopolitical uncertainties than the biggest companies.
Annual revenues of LTM Ltd, Coforge Ltd, Mphasis Ltd, Persistent Systems Ltd, Hexaware Technologies Ltd, L&T Technology Services Ltd, and Sonata Software Ltd grew between 1% and 30% in FY26. To be sure, Hexaware follows a January-December financial calendar whereas other homegrown IT services companies follow the April-March accounting year.
By contrast, bigger players like Infosys Ltd, HCL Technologies Ltd, and Tech Mahindra Ltd grew their revenues by between 1% and 6%.
AI resilience
Automation dominated boardroom discussions last year, as upgrades to existing artificial intelligence tools raised fresh concerns about the relevance of homegrown IT firms. Mid-tier companies, however, were more optimistic.
“The deflationary argument that I suspect all of you hear assumes that code generation is the entire job of a tech services firm. It is not. AI-generated code is cheap to build, but it is expensive to maintain. It is expensive to secure and to own," said Sudhir Singh, chief executive of Coforge, during the company’s post-earnings press conference on Thursday. He added that agentic AI would create an opportunity for the company.
Noida-based Coforge, which overtook Mphasis last year to become the country’s seventh-largest IT services company, was also the fastest-growing IT firm after revenue jumped 29% to $1.87 billion in the financial year ended 31 March 2026.
“We are positively surprised at the book's resilience to AI deflation, with (Coforge’s) management highlighting 25-35% productivity gains in development and 40-60% in code generation, yet sustained demand for maintenance, security and integration services,” said Motilal Oswal analysts Abhishek Pathak and Keval Bhagat, in a note dated 5 May.
On Thursday, Bengaluru-based Sonata reported FY26 revenue at $1.21 billion, up 0.8%. All of its growth came from selling more software licences to companies, which accounts for about three-fourths of its business. Still, this is less than the 15.5% revenue rise it reported in FY25, amid broader demand slowdown as clients shift business in-house and reduce reliance on technology vendors.
The mid-tier's outperformance comes against the backdrop of a lacklustre outing for two of the country’s largest tech services companies - TCS and Wipro Ltd, whose revenue declined 0.5% and 0.3%, respectively, in FY26. While the yearly revenue decline was a first for TCS since listing on the stock exchanges in 2004, Wipro reported a third-straight year of revenue decline.
Mphasis’ management said it had not seen client deferrals the way its larger peers had, even as its chief executive officer (CEO) admitted a tough macro environment.
“So, it's not an easy environment for sure. There is a lot of noise around AI. There is a lot of noise around macro and geopolitics, but staying very focused on the micro, staying very focused on the value of the propositions, making sure that we invest, so we maintain whatever differentiation we think is appropriate and continue to double down on making those investments is really what's driving a lot of this discipline,” said Nitin Rakesh, CEO of Mphasis, during the company’s post-earnings call on 30 April.
While Mphasis said its disciplined execution ensured the projects were serviced as agreed upon, larger peers including HCLTech and Wipro threw light on large clients delaying projects.
Client focus
Mid-tier IT services companies also grow on the back of stronger client relationships as they have leaner teams and fewer layers to cross.
“We have seen bad macro, good macro, and so on. And we as a company have always tried to build capabilities and be closer to our customers to be able to sail through this in a decent manner,” said Sandeep Kalra, CEO of Persistent Systems, during the company’s post-earnings analyst call on 21 April.
“From what we see today, we should be able to have a decent growth in the coming year,” added Kalra, who aims to steer Persistent to the $2 billion revenue mark by FY27.
Mphasis and Persistent ended FY26 with $1.8 billion and $1.65 billion in revenue, up 7% and 17.4%, respectively.
Bengaluru-based Mphasis expects double-digit growth at best, “supported by disciplined execution and increasing demand for AI-led transformation in FY27.”
This caution is reflected in their headcount. The mid-tier firms added more than 12,000 employees on a cumulative basis in FY26, compared to 22,500 in the previous year. On the other hand, the large-caps together slashed workforce by more than 6,500 . However, much of this was due to TCS reducing its headcount by more than 23,000 employees, its largest layoff drive yet.