Skip to content
Industry — Finance — Business — All about technology.

Smaller IT companies excel in specific market segments and build substantial skills within them, resulting in stronger client connections with a higher degree of customer loyalty, leading to an increase in hiring over their larger counterparts.

Smaller businesses' concentration on specialized markets and building substantial expertise within those areas enables them to forge deeper, more loyal client relationships.

,   and  Administrator
2 min read
Smaller IT companies excel in targeting specific markets and building strong proficiencies within...
Smaller IT companies excel in targeting specific markets and building strong proficiencies within those domains, fostering closer client relationships and higher customer loyalty. As a result, these firms have demonstrated better performance compared to larger corporations, and have boosted their hiring efforts.

Smaller IT companies excel in specific market segments and build substantial skills within them, resulting in stronger client connections with a higher degree of customer loyalty, leading to an increase in hiring over their larger counterparts.

In the vibrant landscape of the Indian IT services industry, mid-tier firms like Coforge, Mphasis, and Persistent Systems are making a significant impact, outpacing their larger counterparts in growth rates and deal wins.

Coforge, for instance, reported a robust first-quarter performance, with an order intake of USD 507 million, a 46% year-on-year (YoY) increase. The company signed five large deals and opened six new logos, indicative of a healthy pipeline and sustained growth momentum. CEO Sudhir Singh expressed optimism, stating that Coforge is on track for an exceptional FY26.

Similarly, Mphasis, under the leadership of CEO Nitin Rakesh, reported a highest-ever quarterly Total Contract Value (TCV) of USD 760 million, with 68% being AI-led. The company's direct revenue grew by 10.9% YoY on a reported basis and 8.1% YoY in constant currency. New TCV wins stood at USD 760 million, with 82% being in new-gen services.

Persistent Systems, under the guidance of CEO Sandeep Kalra, also saw impressive growth. The company reported an 18.8% YoY revenue growth in the June quarter, while sustaining operating margins in a challenging macroeconomic environment. The order booking for the quarter was USD 520.8 million in TCV and USD 385.3 million in Annual Contract Value (ACV).

Analysts attribute the success of these mid-tier firms to their focus on vertical-specific tailwinds and their ability to achieve strong deal conversions bolstered by AI-driven efficiencies. The niche market focus allows for deeper client relationships and greater "client stickiness," unlike broader top-tier firms.

Moreover, mid-tier firms have reported moderate headcount growth, unlike top-tier firms which have announced job cuts. Coforge, for instance, added 1,164 resources during the June quarter, while many larger peers reported a decline in net hiring.

These firms also balance scale and flexibility better than both large incumbents and smaller players, enabling them to capitalize on market opportunities quicker. They are actively investing in capabilities such as data centers (Coforge) and negotiating margin expansion while managing capital intensity, which supports growth even amid industry challenges.

However, these mid-tier firms face margin volatility and cash flow concerns, highlighting challenges ahead. Despite these challenges, their growth prospects remain higher than those of top-tier firms, making them a force to reckon with in the Indian IT services industry.

[1] Source: [Link to the original article 1] [2] Source: [Link to the original article 2] [3] Source: [Link to the original article 3]

Read also:

Related

Latest