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Coforge Ltd, Mphasis Ltd, Persistent Systems Ltd, and Firstsource Solutions Ltd have also stated that they are better poised for growth against larger IT services companies, including Tata Consultancy Services Ltd, Infosys Ltd, HCL Technologies Ltd, Wipro Ltd, and Tech Mahindra Ltd.
“There is a certain degree of fatigue (among) customers, where they have incumbent providers, large providers, the “tier 1 providers”, who have really in a way started to become a lot more stale because they haven’t kept up with the level of investment and the level of high touch and intimacy required for transformation programs,” said Nitin Rakesh, chief executive of Mphasis, during the company’s post-earnings call with analysts on 25 July.
Such commentary from the top executives of mid-cap IT services firms about their larger rivals is rare, but underscores their confidence following a streak of faster growth.
Mphasis ended the April-June quarter with $437 million in revenue, up 1.6% from the preceding three months. Banks and financial institutions drove business for India’s eighth-largest IT vendor by revenue, even as clients in the logistics and travel segments held back.
Coforge, Persistent, Mphasis, and Firstsource ended 2024-25 with year-on-year revenue growth of 31.2%, 18.8%, 4.4%, and 23.4%, respectively.
Growth for India’s Big Five IT outsourcers was more modest. TCS’s revenue grew 3.78% in FY25, Infosys’s 3.85%, and HCLTech’s 4.3%, while Wipro and Tech Mahindra recorded a revenue decline of 2.7% and 0.21%, respectively.
Analysts say India’s large IT vendors are wrangled with legacy systems and processes that hinder their ability to innovate and adapt to newer technologies. Meanwhile, smaller firms are more agile in adapting to client needs in the age of artificial intelligence.
“The AI-driven services environment is changing the focus from sheer size to niche capability and flexibility,” said Phil Fersht, chief executive of HFS Research. “Many enterprises are much less locked in with the large-sized providers in today’s market. Some are just too bloated and transactional, and are not rolling out the red carpet for many clients like they used to.”
In contrast, midcap IT firms are aggressive and flexible in winning business from legacy incumbents, he added. “In many deal pursuits, we are seeing the midcaps taken as seriously as the large incumbents by eager clients looking for more value without massive increases in price.”
Key Takeaways
- For two consecutive years, midsize IT firms Coforge, Mphasis, Persistent Systems, and Firstsource delivered stronger revenue growth than India’s top five IT services giants, signalling a shift in market dynamics.
- Leveraging faster decision-making, smaller scale, and focused investments in artificial intelligence, these firms are securing high-value deals and winning over clients from larger rivals weighed down by bureaucracy and legacy systems.
- In a rare show of public rivalry, executives from these midsize players are openly criticising the Big Five for losing their innovation edge, underlining their own confidence in competing head-to-head for large transformation projects.
Agility over legacy
Ritesh Idnani, managing director and CEO of Firstsource Solutions, didn’t hold back against India’s top software outsourcers.
“Unlike our larger peers, we are not restrained by excessive bureaucracy or legacy operations, allowing us to proactively capitalise on AI-driven advancements and emerging industry shifts,” Idnani said during the company’s post-earnings call on 28 April.
He followed that up with similar commentary three months later.
“Clients actually value agility and co-creation areas where we can move much faster than larger players. Our right size is clearly one of our core competitive advantages. And you can see that both in the number and nature of our recent deals,” Idnani said during Firstsource’s post-earnings interaction with analysts on 30 July.
The company ended the April-June period with $259 million in revenue—up 3.6% from the preceding three months, and, according to CEO Idnani, its highest annual order value in five quarters. Firstsource does not call out the deal value as part of its financials.
Sandeep Kalra, executive director and CEO of Persistent Systems, India’s ninth-largest technology outsourcer, said midsize IT companies were eating a chunk of their larger peers’ projects.
“We’ve been brought in as challengers to look at the existing landscape of much bigger players and seeing if we could partake a part of that, how would we do it differently, and so on and so forth,” said Kalra in response to a question during Persistent’s post-earnings call with analysts on 23 July.
The Pune-headquartered IT services company ended the first quarter with $389.7 million in revenue, up 3.9% from the preceding three months. To be sure, Persistent’s revenue growth has been declining since June last year.
About 73% of the company’s $15 million incremental revenue came from banks and financial institutions, the sector Kalra referred to in his comments.
The AI factor
Coforge, India’s seventh-largest IT vendor, registered the industry’s fastest growth in the June quarter, reporting a revenue jump of 9.6% from the preceding three months to $442 million.
Coforge’s management highlighted that new business from an existing or new contract had to exceed $20 million for the company to consider it a large deal internally.
Sudhir Singh, CEO and executive director of Coforge, said during the post-earnings call with analysts on 24 July that 19 of the company’s top 20 clients had been won against the large IT companies.
Coforge’s growth came from clients in the travel and hospitality segment, which made up more than three-fifths of the company’s incremental revenue of $38 million in the first quarter. Between April and June, Coforge earned $101 million from companies in the travel, transport and hospitality space, up 31% sequentially.
“It’s really about agility. The companies that can respond to becoming heavy users of AI are the ones who will win,” said R. Wang, founder of Constellation Research. Artificial intelligence is forcing IT outsourcers to do more work with fewer people and at lower costs, as automation tools can now perform many mundane tasks faster.
Investors have rewarded midsize software service providers for besting their larger peers in terms of growth.
Between 31 March 2023 and 8 August 2025, shares of TCS, Infosys, HCLTech, Wipro, and Tech Mahindra returned -5.29%, -0.34%, 35.98%, 30.9%, and 34.36%, respectively.
In contrast, shares of Coforge, Mphasis, Persistent Systems and Firstsource Solutions returned more than double to investors, between 50% and four times.
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