Two of the country’s fastest-growing tech services firms experienced contrasting outings in the June quarter: Coforge Ltd outpaced peers with a strong forecast for the fiscal year ahead, while Mphasis Ltd grew at a much slower pace and warned of client caution. Their optimism on artificial intelligence (AI) differed as well: Coforge sees AI as a high-margin opportunity to manage client systems, while Mphasis flagged growing client scepticism around measurable AI returns.
Coforge, India’s seventh-largest IT services firm, expanded 21% quarterly to $592.2 million, the fastest growth among the nation’s 15 largest tech services providers. Nearly half of its incremental revenue was driven by healthcare and hi-tech firms, which account for less than a fifth of its total business.
In contrast Mphasis, India’s eighth-largest IT firm, posted $471.1 million in revenue last quarter, up 1.8% sequentially, with a fourth of its growth coming from healthcare, manufacturing, and retail clients. Mphasis announced its first-quarter results on 23 July.
Although both firms were among the fastest-growing tech services companies last fiscal year, expanding 29% and 7%, respectively, their outlooks for the current fiscal remain divergent.
Coforge chief executive Sudhir Singh said the company has remained insulated from the macroeconomic slowdown that has hit the country’s $300-billion IT sector hard. “Fiscal year 2027 is shaping up to be an exceptional growth year for Coforge, despite the significant AI-driven flux,” Singh said during the company’s post-earnings conference call on Tuesday.
“Not only do we expect to set the benchmark on revenue growth, but we also expect to emerge as one of the highest-margin mid-caps across our industry in this year itself,” he added.
In contrast, Mphasis chief executive Nitin Rakesh was a little apprehensive. “I think the environment at a macro level is obviously complex, I think, to say the least. What that does is it creates uncertainty. And of course that leads to a certain degree of caution with clients in committing to programs, not knowing where the cycles are heading,” Rakesh said during the company’s post-earnings conference call on 24 July.
The company maintained its full-year growth guidance from the preceding quarter, aiming for “high-single-digit to low-double-digit growth in constant currency, despite the uncertain macro environment”.
The divergent moods were reflected in investors’ reactions: Coforge shares surged 10% the day after its results, while Mphasis opened 0.3% lower following its earnings announcement.
Profits, operating margins hit
Both companies’ net profit took a hit in Q1. Coforge's net profit fell 15% sequentially to ₹519 crore ($55.6 million) whereas Mphasis’ net profit fell 4% sequentially to ₹490 crore ($51.6 million).
Operating margins followed a similar trajectory for both companies, with each posting a 60-basis-point sequential drop. Coforge's operating margin stood at 16%, while Mphasis' came in at 14.8%. Coforge’s margins were weighed down by a one-time $500 million acquisition cost for Encora. Meanwhile, Mphasis saw its margins compressed by acquisition-related expenses and a ramp-up of new deal wins. Coforge funded the Encora deal primarily through equity, issuing $1.89 billion in shares before raising $550 million via a qualified institutional placement (QIP) to clear Encora’s debt.
Both firms expanded their workforces last quarter. Coforge added 10,451 employees to bring its total headcount to 46,228, while Mphasis added 918 employees to reach 32,097 people.
For now, one brokerage has given Coforge’s results the thumbs up. “With management guiding for the strongest sequential growth in three years in Q2FY27 and retaining its FY27 growth outlook, we believe revenue visibility has improved, although execution of recent deal wins remains the key monitorable,” Motilal Oswal Financial Services analysts Abhishek Pathak and Keval Bhagat wrote in a note dated 24 July.
The AI threat
The rise of automation tools presents an existential threat to India's tech services industry, triggering intense price wars as firms slash margins to secure contracts.
For now, Coforge is relying on demand from large enterprises to maintain and operate their AI infrastructure.“We recognize that AI-generated code is cheap to build, but we also realize that it is expensive to maintain, secure, and govern. Agentic AI will create a massive managed services net, and maintaining it will yield a recurring, high-margin revenue stream—for firms capable of seizing it,” Coforge chief executive Sudhir Singh said during the earnings press conference.
This optimism contrasts sharply with the view at Mphasis, where chief executive Nitin Rakesh noted that enterprise discussions around AI have become far more demanding.“Twelve months ago, every enterprise conversation began with model access and experimentation. Today, it begins with accountability,” Rakesh said during the call.
He added, “Business leaders are asking harder questions: Where is the measurable return on our AI investment? How do we govern AI decisions in regulated environments? How do we convert AI capability into durable economic outcomes—in revenue, cost, and risk—that hold up under board scrutiny?” Rakesh said while clients now possess raw AI capabilities, they often lack the expertise to convert them into tangible business outcomes.