How India's mid-cap IT bested the Big Four in hiring

Mint

14-05-2025

The Big Four of Indian IT ceded their crown as the industry's top hirers in FY25, beaten by smaller rivals which grew faster for the second year in a row. While the heavyweights added 9,442 employees, their mid-cap rivals together added 25,794, data from earnings reports showed.
The Big Four include Tata Consultancy Services Ltd, Infosys Ltd, HCL Technologies Ltd and Wipro Ltd which earn above $10 billion annually, while the mid-cap IT firms are Tech Mahindra Ltd, LTIMindtree Ltd, Mphasis Ltd, Coforge Ltd, Persistent Systems Ltd, Hexaware Technologies Ltd, L&T Technology Services Ltd, Sonata Software Ltd, and Firstsource Solutions Ltd which earn $1-6.3 billion.
Mid-cap IT firms hired more as they grew faster, at least one analyst said.
Also read: Tech Mahindra banks on growth from new consulting and GCC units
'One simple reason for the mid-caps adding more net headcount last year as compared with the Big Four is that they have been growing faster than the larger peers," said Abhishek Kumar, equity research analyst at JM Financial.
Mid-caps other than Tech Mahindra saw revenue growth of 4.43-31.2% last fiscal, while the big three including TCS, Infosys, and HCLTech grew 3.78-4.3%. Wipro and Tech Mahindra reported a second straight year of revenue decline.
To be sure, the top four companies remain Indian IT's biggest employers with about 1.39 million people on their rolls, while smaller firms employ 420,599, or a little more than a third of what their larger peers have.
The growth and hiring momentum at mid-cap IT firms is also due to the smaller companies winning deals from the Big Four, a second expert said.
'Tier-1 vendors have been the net beneficiaries of vendor consolidation in the past cycles, although this feat may be tough to replicate in the current cycle," said Kotak Institutional Equities analysts Kawaljeet Saluja, Sathishkumar S. and Vamshi Krishna, in a note dated 13 May. Vendor consolidation deals refer to a strategy where clients reduce the number of IT vendors they work with.
Mumbai-based TCS added 6,433 people last fiscal, the highest among large-caps, whereas Noida-based Coforge added 8,771 employees, the most among India's 15 largest IT services companies. Even the latter's full-year revenue growth of 31.2% was the highest among the country's IT outsourcers. To be sure, Coforge made its largest acquisition, that of Cigniti, the Hyderabad-based engineering services company last fiscal year.
Also read: 'Persistence' pays off as India gets a new ninth-largest IT company
'In addition to reduced deal sizes, a couple of factors are playing to the advantage of mid-tier companies—(1) many challengers are hungrier with excellent management teams, (2) competencies are much improved and (3) some of the Tier 1s have slipped in execution," the Kotak analysts said.
The increase in headcount comes on the back of a series of large deal wins for the mid-cap companies. LTIMindtree bagged its largest deal on Monday, a $450 million contract spanning seven years with ADM, a Chicago-based food processing company. This comes less than three months after Coforge bagged its largest contract, a 13-year deal valued at $1.56 billion with Sabre, a Texas-based travel technology company in March.
In contrast, the Big Four have struggled to win large contracts, except Wipro that inked two deals valued at $500 million and above within a span of 12 months.
'The mid-cap firms are clearly taking market share from the larger firms," said Peter Bendor-Samuel, founder of Everest Group.
'At this time, the market is favouring specialist firms which promise to provide more executive time and commitment. These (mid-cap) firms are often focused in higher growing niches and do not have the problem of the underperforming market segments which are dragging down the revenue of the larger diversified firms," said Bendor-Samuel.
The picture was different in FY24, when IT companies shrank headcount.
Also read: TCS launches India-focused sovereign cloud to boost domestic revenue
While the large-caps cut headcount by 63,662 employees, the smaller peers reduced by 8,031. Seven of the 11 largest IT services companies ended that year with fewer workers.
To be sure, there has been an increase in the $1 billion club of Indian IT over the last two years. RP Sanjiv Goenka-owned Firstsource was the latest entrant after it reported $250 million in revenue for the April-March 2025 period, giving it a $1 billion run-rate. Hexaware and Persistent Systems were the two other companies to enter the club.