12-08-2025
Mid-Tier IT Companies Perform Better than Larger Peers, Increase Hiring
The ability of smaller firms to focus on niche industries and developing significant capabilities within these sectors allow them to have a deeper relationship with clients with more "client stickiness"
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Mid-tier Indian IT services firms like Coforge, Mphasis, and Persistent Systems outpaced their larger peers in Q1 FY26 with faster growth rates and stronger deal wins. While industry growth slowed, mid-tier players posted about 20 per cent YoY revenue growth on average, outperforming top-tier firms' 1.5 per cent, amid cautious client spending.
Coforge reported revenue growth of 9.6 per cent QoQ and 54.5 per cent YoY in USD terms for the first quarter ended June. The order intake stood at USD 507 million during the first quarter with five large deals signed during the quarter and 6 new logos opened during the quarter.
Compared to many larger peers that reported decline in net hiring, Coforge reported a net addition of 1,164 resources during the June quarter.
"The 9.6 per cent sequential dollar growth in Q1, a next twelve-month signed order book which is 46 per cent higher YoY, a very robust large deal pipeline and a pathway to 14 per cent EBIT in FY26, are all pointers to what we believe will be an exceptional FY26. We remain committed to sustaining an execution intensity that is uniquely our own and to turning in the ninth consecutive year of sustained and robust growth. Our industry is pivoting, and AI is the biggest transformation lever of our times," said Sudhir Singh, CEO and Executive Director, Coforge.
Persistent Systems reported an 18.8 per cent YoY growth in revenue in the June quarter. The order booking for the quarter was USD 520.8 million in total contract value (TCV) and USD 385.3 million in annual contract value (ACV).
"We delivered our 21st sequential quarter of revenue growth, up 3.9 per cent QoQ and 18.8 per cent YoY, while sustaining operating margins in a challenging macroeconomic environment. This performance reflects the strength of our AI-led, platform-driven strategy, focus on customer value creation, and our ability to unlock measurable outcomes," said Sandeep Kalra, CEO and Executive Director, Persistent.
Mphasis' gross revenue for the first quarter grew 9.2 per cent YoY in Q1 FY26 on a reported basis and 6.5 per cent YoY in constant currency. Direct revenue grew 10.9 per cent YoY on reported basis and 8.1 per cent YoY in constant currency. New TCV wins stood at USD 760 million in direct, of which 82 per cent were in new-gen services.
"We were early adopters and implementers of AI based solutions for our clients, which has positioned us well to help with their AI journey, create efficiencies, cost-savings and minimize project risks, while at the same time, accelerating our business. This is reflected in our highest-ever quarterly TCV of USD 760 million, of which 68 per cent is AI-led. Overall, it is a good start to the new financial year, that sets the stage for the year ahead," said Nitin Rakesh, CEO and Managing Director, Mphasis.
Analysts believe the ability of smaller firms to focus on niche industries and developing significant capabilities within these sectors allow them to have a deeper relationship with clients with more "client stickiness."
