Mid-cap information technology (IT) services companies believe they are less vulnerable to AI-led disruption than their larger peers. This view is reinforced by their stronger growth, with firms earning $1-2 billion expanding faster than the big six last year.
Executives at these companies cite nimble structures, deeper domain focus and faster AI adoption enabled by fewer organizational layers as key advantages. Over the past two months, mid-cap IT leaders have also struck a more optimistic tone on AI-driven software rollouts and on sharing AI-led savings with clients, in contrast to the guarded stance of India’s big six.
The “big six” typically refers to TCS, Infosys, HCL Technologies, Wipro, Tech Mahindra and LTM (formerly LTIMindtree), while Mphasis is often grouped among large mid-tier IT firms.
Large caps, meanwhile, have flagged AI’s deflationary impact in post-earnings calls, reflecting concerns that rapid advances since the start of the year could reshape demand and pricing in the $297 billion sector. The divergence has sharpened investor scrutiny of whether the worst of the disruption is already priced in.
No existential threat
Atleast one chief executive said his company does not face a threat from AI companies launching new software products.
“The demand is evolving. These are new demand areas that are coming up. No one firm can address it. It’s a huge market. It’s an expanding market. It will have to have more than one, two or three players,” said Sudhir Singh, chief executive of Coforge Limited, during the company’s post-earnings press conference on 7 May.
This contrasts with commentary from larger peers.
“There is a level of vendor fatigue, a level of partner fatigue also that happens in the organizations where there's a concern that these people (IT services firms) may not give us truly cutting edge work because they're afraid about cannibalizing their own business. And we have seen that most exceptionally in the retail business,” said Mohit Joshi, chief executive officer of Tech Mahindra Limited, during the company’s post-earnings analyst call on 22 April.
Another key fault line is how much AI-driven productivity savings are being passed on to clients.
“In our case, the pass-through to clients is very measured and structured because in most cases, we are partially passing it, but we're also using the meaningful portion of the saves in asking the client to reinvest into the expanded scope, additional automation, additional AI layers and modernization work,” said Nitin Rakesh, CEO of Mphasis Limited, during the company’s Q4 analyst call on 30 April.
Conversely, Infosys Ltd chief executive Salil Parekh said “the competitive intensity in the market has gone up and the productivity will get passed back to the client largely,” during the company’s post-earnings analyst call on 23 April.
Numbers tell
Mid-cap firms such as Coforge Limited and Persistent Systems Limited outpaced larger peers including Infosys Ltd, Mphasis Limited and HCL Technologies Limited in revenue growth last year.
Coforge and Persistent Systems were among the fastest-growing IT services firms last year, with revenue rising 29% and 17% to $1.87 billion and $1.65 billion, respectively.
In comparison, Infosys and Mphasis grew 4.6% and 6.9% to $20.16 billion and $1.8 billion, respectively.
Among the big six, HCL Technologies Limited grew 6% to $14.66 billion, making it the fastest-growing large IT services company.
Challenger brands
Mid-caps, which grew slower in FY26 than in the year-ago period but faster than their larger peers, said they are increasingly emerging as challengers to Tier-1 companies.
“We are increasingly being brought in as a credible challenger to Tier-1 outsourcing firms by our customers and prospects,” said Sandeep Kalra, CEO of Persistent Systems Limited, during the company’s post-earnings call on 21 April.
“Look we play in the same ecosystem and some of our larger customers are where we share the customers with a few other strategic Tier ones as well. Now, as far as we are concerned, we have been able to grow in the same set of accounts despite the headwinds that all of us have faced,” added Kalra.
Coforge's Singh echoed the sentiment.
“If you go back nine years and look at the first investor call we did, nine years back, we said we saw our differentiation as being an emerging technology player that understood a few industry domains extremely well. So compared to the larger IT players, there are a few advantages that we think we structurally have,” he said.
“[W]e are eating our own cooking by embedding AI across both the SDLC (Software Development Life Cycle) and our internal operations,” Singh told analysts on 5 May.
“On the SDLC front, AI is deeply embedded into how we build and deliver. We are driving 25% to 35% productivity uplift in development, 40% to 60% in code generation, and up to 10 times faster modernization timelines,” added Singh.
For the first time, each of the big six’s management teams acknowledged that AI could eat into parts of their revenue base.
“If we look at the industry today and categorize it, 40% of the industry runs the risk of being disrupted by AI and can shrink 3% to 5% CAGR for a few years and can eventually be 25% of the enterprise spend,” said C Vijayakumar, CEO of HCLTech, during the company’s post-earnings analyst call on 21 April.
The optimism of mid-cap leaders has found support in at least one brokerage note.
“Mid-tier companies are in a sweet spot, these players combine sharper execution, agile GTM strategies, creative deal constructs and tailwinds from favorable tech trends, setting them up for sustained success,” said Kotak Institutional Equities analysts Kawaljeet Saluja, Sathishkumar S, and Vamshi Krishna in a note dated 13 May.