**Mid-Sized IT Firms in India Set for Strong Growth in FY26**
India’s mid-sized IT services companies, generating annual revenues between $1 billion and $5 billion, are poised to outpace their larger counterparts in the first quarter of FY26. This growth is attributed to significant deal wins, minimal exposure to sectors affected by tariffs, and enhanced adoption of Generative AI technologies. Firms such as LTIMindtree Ltd, Mphasis Ltd, Coforge Ltd, Persistent Systems Ltd, and Hexaware Technologies Ltd are projected to achieve sequential revenue growth ranging from 0.6% to 9% for the quarter ending in June, according to insights from multiple brokerages.
In contrast, larger firms like Tata Consultancy Services (TCS), Infosys, HCLTech, Wipro, and Tech Mahindra are expected to see growth of approximately 3.5%. Notably, Wipro may experience a decline of up to 2.5% due to weak demand in Europe and reduced client spending. Analysts predict that Infosys will outperform its larger peers, while Coforge is anticipated to lead the mid-cap sector, bolstered by a $120 million annual contract with Sabre Corp. secured in March. Persistent Systems is expected to report a sequential growth of 4.1%, as noted by Kotak Institutional Equities.
Analysts from Kotak Institutional Equities expressed that the upcoming quarter will present a mixed landscape, with mid-tier IT services firms demonstrating robust growth, while larger IT companies and engineering research and development (ERD) firms may fall short of expectations. They highlighted that strategic deal structuring, market share gains, and a favorable portfolio with low manufacturing exposure will contribute to the strong performance of mid-tier firms, with Coforge and Persistent Systems leading the charge.
The outperformance of mid-cap firms can be attributed to their agility in securing large deals and their significant revenue contributions from the banking and financial services industry (BFSI), which appears less affected by tariff-related macroeconomic challenges. Analysts from ICICI Securities noted that mid-caps have successfully capitalized on high-growth opportunities, contrasting with the more subdued performance of larger firms.
The optimism surrounding mid-cap tech service providers is further supported by their strong performance in the previous fiscal year. Five of the eight mid-cap firms in this revenue bracket reported double-digit revenue growth, with Coforge leading the way with a remarkable 31% increase. This stands in stark contrast to the top five firms, which managed a maximum growth of only 4.3%. Mid-cap companies have excelled in securing significant deals that have eluded their larger peers, with LTIMindtree landing a major contract with US-based Archer-Daniels-Midland Co. in May and Coforge finalizing the Sabre deal in March.
In conclusion, the landscape for mid-sized IT firms in India appears promising as they leverage their strengths to achieve substantial growth, while larger firms face challenges that may hinder their performance in the near term.
**FAQ**
**Q: Why are mid-sized IT firms expected to outperform larger firms in FY26?**
A: Mid-sized IT firms are expected to outperform larger firms due to significant deal wins, lower exposure to tariff-affected sectors, and better adoption of Generative AI technologies.
