In the fourth quarter and the fiscal year of FY25, mid- and small-cap IT services companies continued to outperform their larger counterparts; analysts predict that this trend will continue into FY26. This is a big change from the past, when tech behemoths like TCS, Infosys, and HCL Technologies usually topped the growth charts.
Companies like Mphasis, Persistent Systems, Hexaware Technologies, and Coforge reported remarkable revenue growth in FY25, with growth rates ranging from 7% to 32%. Wipro’s sales decreased by 2%, while TCS, Infosys, and HCLTech reported modest growth of about 4%. The January–March quarter saw a 12.4% increase in L&T Technology Services’ sequential revenue to Rs 2,982.4 crore, while Coforge’s increased 4.7% to Rs 3,410 crore, making the performance gap even more noticeable. Even though they closed big transactions, the bigger companies’ outcomes were inconsistent and fell short of revenue projections.
Smaller IT firms outperform them for a number of reasons, according to analysts, including better execution, faster adoption of new technologies like generative AI, and more stable leadership.
Stability in leadership has also been very important. The strategy and execution of many mid-sized companies are consistent because their CEOs have been in their positions for more than five years. Several industrial titans, on the other hand, are adjusting to new leadership.
On the other hand, large-cap companies have a more muted start to FY26. Notwithstanding robust transaction pipelines, conservative revenue projections have resulted from worries about macroeconomic factors, such as unpredictable US tariffs and low discretionary expenditure. As clients continue to put off making decisions, executives from TCS, Infosys, Wipro, and HCLTech echoed the wait-and-watch approach.
This difference in mood was reflected in hiring patterns as well. By increasing staff in Q4 FY25, Infosys, TCS, and Wipro undid the headcount reductions from the prior quarters. Despite hiring more than 2,600 people in the last quarter, HCLTech’s yearly workforce decreased as a result of a divestment. In the meanwhile, mid-sized businesses want to keep on hiring recent graduates while further relying on technology to increase productivity.
