In the fiscal year 2025, mid-tier Indian Information Technology (IT) firms emerged as stronger performers compared to industry giants, demonstrating their agility and strategic focus during a period marked by uncertain macroeconomic conditions. Companies like Persistent Systems, Coforge, KPIT, and Mphasis have recorded impressive revenue growth, underscoring their capability to leverage niche market opportunities and advanced technologies such as Artificial Intelligence (AI) for sustained business expansion.

Mid-Tier Firms Surpass Top Players in Revenue Growth

While heavyweights such as Tata Consultancy Services (TCS) and Infosys posted moderate growth of around 4.2% in FY25, several mid-tier companies achieved significantly higher rates. For example:

• Persistent Systems recorded approximately 21% revenue growth in Q4 FY25, reaching Rs. 3,201 crore (US$ 375 million), with full-year growth near 19%.

• Coforge saw its full-year revenue rise by 31.5%, with a remarkable 43.6% growth in Q4.

• KPIT’s Q4 revenue increased by 16%, focusing heavily on the automotive sector.

• Hexaware, backed by Carlyle, reported 12% growth in Q1 FY25.

This trend indicates a shift in client preference toward mid-tier firms, which can offer specialised services and competitive pricing.

Niche Industry Focus Drives Competitive Advantage

One key factor behind this strong performance is the mid-tier firms’ deliberate targeting of niche sectors, allowing them to develop deeper client relationships and expand their share of wallet within existing accounts. This strategy contrasts with larger firms’ broader market approach, often spread across many sectors.

• Persistent Systems targets sectors like banking, financial services, insurance (BFSI), healthcare, life sciences, and emerging industries, allowing tailored solutions that meet specific industry challenges.

• KPIT focuses extensively on the automotive industry, supporting trends such as electric vehicles, autonomous driving, and connected cars.

• Coforge maintains a strong presence in travel, tourism, and healthcare, navigating sector-specific macroeconomic headwinds while securing large deals.

This focused approach enables mid-tier firms to offer domain expertise that clients value highly, especially in complex digital transformation initiatives.

Early and Effective AI Adoption

Another significant advantage for many mid-tier companies is their early embrace of Artificial Intelligence (AI) technologies, which has bolstered their service offerings and market positioning.

• Mphasis, led by CEO Mr. Nitin Rakesh, established an AI lab as early as 2015–16, positioning itself ahead of many competitors in developing AI-driven solutions.

• Mid-tier firms often integrate AI into automation, analytics, and customer experience projects, helping clients improve efficiency and innovation.

Such investments have allowed mid-tier companies to differentiate themselves from larger firms, some of which are still accelerating their AI adoption.

Operating Efficiency and Cost Optimisation

Mid-tier IT firms typically operate with lower margins, enabling them to compete aggressively on cost, particularly through cost-optimisation deals. These deals appeal to clients seeking high-quality services at competitive prices amid muted demand and cautious spending.

• This operational efficiency has proven crucial in a business environment where client decision-making has slowed down due to economic uncertainties.

• The ability to offer flexible pricing models and cost-effective solutions helps mid-tier firms win and retain clients, particularly among startups and medium-sized enterprises.

Challenges and Outlook

Despite their growth, mid-tier firms face challenges in sustaining momentum into FY26. Some sectors remain vulnerable due to ongoing macroeconomic pressures, such as travel, tourism, and healthcare, affecting client spending patterns.

However, firms like Coforge express confidence in maintaining their deal pipeline, especially for large contracts. Continued focus on AI, niche industries, and operational efficiency will be key to enduring success.

Meanwhile, the giants like TCS and Infosys continue to dominate in scale, with revenues of Rs. 2,56,110 crore (US$ 30 billion) and Rs. 1,70,740 crore (US$ 20 billion) respectively, but they face pressure to innovate and adapt quickly to retain market leadership amid the rising prominence of nimble mid-tier players.

Conclusion

The FY25 performance of mid-tier Indian IT companies highlights their growing importance in the global technology services ecosystem. By focusing on niche sectors, early AI adoption, and cost-effective operations, these firms have outpaced traditional leaders in growth, signaling a more competitive and diversified IT landscape in India.

As they continue to navigate economic uncertainties and client spending patterns, their ability to sustain growth will depend on innovation, deepening client partnerships, and expanding their footprint in emerging technologies. The evolving scenario also pushes larger firms to accelerate their transformation efforts, ensuring a dynamic and competitive industry for the foreseeable future.

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