Indian Economy News

Mid-tier Information Technology (IT) firms beat top players in FY25 growth; focus on Artificial Intelligence (AI), niches

Mid-tier Information Technology (IT) companies have reported stronger growth than their larger counterparts in FY25, demonstrating their ability to effectively navigate an uncertain macroeconomic environment. The challenge, however, remains whether they can sustain this momentum in FY26. These firms, such as Persistent Systems, Coforge, KPIT, and Mphasis, target niche businesses, and industries, allowing them to deepen client relationships and expand wallet share from existing customers. For instance, KPIT focuses on the automotive sector. Persistent targets banking, financial services, insurance (BFSI), healthcare, life sciences, and emerging industries. Despite muted demand and slowed client spending, Persistent’s revenue grew by approximately 21% in Q4 FY25, reaching Rs. 3,201 crore (US$ 375 million). In comparison, full-year growth was about 19%. Similarly, Hexaware, backed by Carlyle, reported a 12% revenue growth for Q1 FY25, and KPIT’s Q4 revenue rose by 16%. Coforge's full-year revenue increased 31.5%, with Q4 growth of 43.6%.

Tata Consultancy Services (TCS) and Infosys reported 4.2% growth in FY25, with their Q4 FY25 revenues up 1.4% and 3.6%, respectively. However, most mid-tier firms have revenue just above a billion dollars. TCS and Infosys generate around Rs. 2,56,110 crore (US$ 30 billion) and Rs. 1,70,740 crore (US$ 20 billion). Some mid-tier firms have embraced Artificial Intelligence (AI) more effectively than their larger counterparts. Chief Executive Officer of Mphasis, Mr. Nitin Rakesh, highlighted the company's early investment in AI, starting with establishing an AI lab in 2015–16. While some mid-tier firms are experiencing slower client decision-making, they benefit from cost-optimisation deals, which give them an advantage due to their ability to operate at lower margins. Coforge remains confident of maintaining its momentum in large deals despite ongoing macroeconomic challenges in the travel, tourism, and healthcare sectors.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.