How mid-tier IT firms are outpacing India’s tech giants

While India’s $283 billion IT industry braces for muted demand in the second half of FY26, companies ranked six to ten in the pecking order—LTIMindtree Ltd, Coforge Ltd, Mphasis Ltd, Persistent Systems Ltd, and Hexaware Technologies Ltd—have sustained their momentum. Their first-half performance was stronger than a year ago, outstripping both their own pace in FY25 and the growth of large peers such as Tata Consultancy Services (TCS), Infosys, and Wipro.

LTIMindtree, Coforge, Mphasis, Persistent, and Hexaware ended the first half of FY26 with revenues of $2.3 billion, $904 million, $882 million, $796 million, and $777 million, respectively, translating into year-on-year growth of 5%, 36.8%, 6.1%, 18.1%, and 7%. All five grew faster in the first half of FY26 than in the same period a year ago.

In contrast, among the large caps, only Infosys Ltd and HCL Technologies Ltd managed to accelerate growth in the first half, with revenue up 4.26% and 5.98% in the April-September 2025 period, respectively. Tech Mahindra’s growth was flat, while TCS and Wipro both reported declines.

Agility pays off

The strong performance of mid-sized tech service providers has come despite visa uncertainties in the US, the largest market for India’s IT services companies, and headwinds from artificial intelligence (AI)-led pricing deflation and subdued demand for IT modernization contracts. As Mint reported on 22 September, mid-tier firms are more vulnerable to visa issues than large caps because their business models rely on closer client engagement.

Yet, executives at these firms remain optimistic about the second half.

“We continue to believe that demand, especially with the advent of AI, has mutated, but the addressable demand continues to grow at a solid clip. When we look at our three core verticals, banking, insurance, and travel, and when we look at the trends that we see, observed within them, we see positive trends,” said Sudhir Singh, chief executive of Coforge, during the company’s post-earnings call with analysts on 24 October.

Seventh-largest Coforge has outperformed India’s 15 biggest IT services companies for the past 18 months, buoyed by its $1.83 billion deal with Sabre in March and the December 2024 acquisition of Hyderabad-based Cigniti, an engineering services firm.

Singh added that he expects a stronger second half: “What we discussed last quarter was that (the) second half will be a growth half for us over H1 because our H1 numbers have been extremely strong. We continue to maintain that the full fiscal will be a robust growth fiscal for us. And H2 will also be a robust growth half for us.”

Sandeep Kalra, CEO and executive director of Persistent Systems, echoed that optimism. “The pipeline is good. The pipeline, I would say, is broad-based and that is reflecting in our order wins. And I’m hopeful that the industry should also be showing good order wins as we go along,” he said during the company’s 14 October analyst interaction.

LTIMindtree, Coforge, and Persistent Systems reported order wins worth $1.59 billion, $1.64 billion, and $609 million in Q2FY26, respectively. TCS has an order book of $10 billion whereas Infosys bagged large deals worth $3.1 billion during the period. On the other hand, new deal wins at HCLTech totalled $2.57 billion.

Analysts credit this performance to leaner delivery structures and faster pivots to AI-led opportunities. “The mid-tier IT players have been more agile in pivoting toward AI-led and engineering-driven opportunities,” said Phil Fersht, CEO of HFS Research. “They are less weighed down by legacy transformation programmes and large, slow-moving deals that have held back the Tier 1s. This flexibility has allowed them to chase faster-turning projects in data modernization, cloud orchestration, and GenAI enablement, where clients want quick outcomes rather than multi-year commitments.”

For Mphasis, client engagement remains steady regardless of macro conditions. “Client behaviour at this point is less macro dependent, but more dependent on what is the proposition that they’re trying to drive,” said Nitin Rakesh, CEO of Mphasis, during the company’s 31 October analyst call. “Efficiency and savings are still very much a theme that is driving a lot of conversations, but it’s not in isolation of the transformation needs.”

Another factor helping mid-caps: their client mix. “Mid-cap firms often have more of their focus on mid-sized clients ($1-10 billion),” said Peter Bendor-Samuel, founder of Everest Group, a Dallas-based tech research company. “This segment is growing twice as fast as the large-sized firms and so they are able to grow faster.”

Higher profits, leaner teams

Four of the five mid-caps also reported higher operating margins in the first half of FY26, defying the usual trade-off between growth and profitability.

Year-on-year, LTIMindtree, Coforge, Persistent Systems, and Hexaware expanded margins by 70-260 basis points to 15.9%, 14%, 16.3%, and 15%, respectively. Mphasis’ margins were steady at 15.3%.

In the year-ago period, two of the five including Coforge and Persistent Systems had ended with a decline in profitability. For the remaining three, margin expansion did not exceed 80 basis points in H1FY25. Typically, revenue growth comes at the cost of operating margins but the mid-caps defied the trend.

Four of the top five including TCS, Infosys, HCLTech, and Tech Mahindra managed to increase their profitability in July-September 2025 by 70 basis points, 20 basis points, 110 basis points, and 100 basis points to 25.2%, 21%, 17.4%, and 12.1%, respectively, thereby reaffirming their faith in profitable growth. Wipro’s margins fell 10 basis points to 17.2%.

Fersht noted that mid-tier companies have been better able to manage costs. “The sweet spot has been deals that combine automation, cloud, and analytics as these are areas that yield faster revenue recognition with less dependency on large headcount additions.”

Indeed, much of this growth came despite lower hiring. Cumulatively, the mid-caps added 7,036 employees in the first half of FY26, down 38% from a year earlier. LTIMindtree, Coforge, and Hexaware added 2,140, 1,873, and 2,026 employees, respectively. Mphasis cut 633 roles, less than the 1,063 it eliminated in the previous fiscal, while Persistent was the outlier, hiring 1,630 after reducing staff last year.

Since the start of the fiscal year, shares of TCS, Infosys, HCLTech, Wipro and Tech Mahindra have fallen 15.8%, 4%, 0.2%, 8.6% and 1.4%, respectively. In contrast, mid-tier peers such as LTIMindtree, Coforge, Mphasis and Persistent Systems have gained 27.7%, 13.3%, 13.4% and 12%. Hexaware Technologies’ shares fell 0.6% to ₹698.7 at the end of trading on Thursday.