Mid-tier IT firms show greater resilience than large peers

Bengaluru: Mid-sized IT firms including LTIMindtree, Coforge, Persistent Systems and Mphasis have posted high-quality growth in the second quarter, and these companies are continuously advancing their AI infrastructure in order to win more AI deals.

LTIMindtree in the second quarter ended September 2025, posted a 12% increase in its consolidated net profit at Rs 1,401 crore. Recently, the company won a $100 million multi-year deal with a US-based global manufacturer of chemicals and polymers.

Coforge, which recorded a 5.9% sequential Constant Currency (CC) growth, registered an EBIT of 14% for the second quarter. Its net profit during the quarter was Rs 375.8 crore, up 86% Y-o-Y and the company signed five large deals during the September quarter. 

Mphasis reported a 10.8% increase in its consolidated net profit for the quarter ended September 2025, to Rs 469 crore. Its revenue from operations in the second quarter stood at  Rs 3,902 crore, a 10% increase.  

Persistent reported $406.2 million revenue in Q2 FY26 with 17.6% Y-o-Y growth. “Our AI strategy builds on a strong platform-led foundation and is powered by deep domain knowledge, differentiated IPs, accelerators and strategic partnerships. This integrated approach brings together enterprise readiness for AI transformation, engineering hyper-productivity and business hyper-productivity,” said Sandeep Kalra, CEO and Executive Director, Persistent.

Coforge is leveraging code inside AI, its own code intelligence platform to harness the power of advanced large language models (LLMs).

These mid-sized IT firms are trying to capture a share of the rapidly growing AI market.

During the company’s second quarter earnings conference, Sudhir Singh, CEO, Coforge said, “Our platforms, including Code Insight AI for enhanced software reverse engineering, BlueSwan for integrated automation and orchestration, and ForgeX for rapid transformation are infusing generative AI and intelligent automation into the very fabric of our delivery models.”

Mid-tier IT services firms once again showed greater resilience than their Tier-1 peers in Q2 FY26 — not just in topline growth but in operational discipline, said Praveen Bhadada, CEO & Managing Partner, NEOVAY Global, a consulting firm.

While Tier-1 firms are still working through discretionary-spend fatigue and delayed deal ramp ups, Tier 2 cohorts saw relatively better growth with Coforge and Persistent marching ahead yet again this quarter, he said.

“However, bookings growth in this quarter was a mixed bag with only a few large companies (such as HCL and TCS) showing QoQ growth. Headline wins were also not visible barring a few resilient mid-caps such as Coforge, Persistent, and LTTS (with a $100 million order this quarter). This is likely going to put pressure on the future growth prospects of the sector,” he  explained.

Mid-sized IT firms can position as AI native

AI is a great equalizer, and all the tech services firms rely on the same foundation models and third-party tools. Data Science and AI engineering skills are also available to all players. Hence the large firms do not have a significant advantage or more. “Another key aspect of this market is that clients seem to prefer specialist firms and have significant doubts about the large players, these concerns are further amplified as the large incumbent players are committed to the labour arbitrage model, which is being disrupted and creating a misalignment in motivation that is becoming obvious to their clients,” Peter Bendor-Samuel, Founder and Executive Chairman of Everest Group told DH.

He added that if the smaller firms can position themselves as AI native or more committed to AI they are often perceived as the go to option, allowing them to compete, win and take market share.

As these mid-size firms move forward, they should seek to further craft their position as specialists in AI and AI transformation, and they should seek to combine this with an industry and functional focus to make this positioning more relevant. “They must address the fundamental issue that clients face. That is, almost all AI investments fail to create a significant ROI (Return on Investment). The reason for this is that in AI transformation significant unlocking does not occur until the client has changed its operating model. Just adding new AI tech to the existing process results in incremental benefits not significant unlock. Hence these firms must address the broader people process and technology story, and not just the technology,” he said.

However, Praveen Bhadada said AI roadmaps, though ubiquitous in commentary, are not very differentiated across the firms and give an impression of missing clarity. While all firms talked about moving from pilots to early monetisation, the financial impact continues to remain marginal for now. FY26-27 will be the year to watch for tangible outcomes and emergence of platform centric revenue models across Engineering Productivity, Enterprise Productivity and Data for AI use cases.

“From a valuation perspective, multiples remain elevated for select outliers (such as Coforge, Persistent), suggesting investor belief in resilient market leaders and AI-driven or large-deal narratives rather than broad sector strength” he further said.