The country’s mid-sized IT services firms, earning between $1-2 billion in revenue, are expected to do more business than their larger peers in the current fiscal, making it a first since the turn of the century. The hack is simple: acquisitions.
At least three experts have said Indian IT’s mid-caps are also expected to acquire more companies than their larger peers to scale quicker as the rise of automation raises concerns regarding their relevance and threatens to eat into their revenue.
Three of the country’s seven mid-sized information technology (IT) services companies which have closed acquisitions in the first three months of the financial year are expected to add $647 million in new business this fiscal.
That is roughly three-fifths of the $1.04 billion in incremental revenue they added last fiscal. By comparison, the country’s five largest IT services firms—Tata Consultancy Services Ltd, Infosys Ltd, HCL Technologies Ltd, Wipro Ltd and Tech Mahindra Ltd—collectively added $1.6 billion in incremental revenue last year.
This year, Wipro is expected to add $136 million through its acquisition of Singapore-based Mindsprint, Olam Group’s IT arm. Infosys, meanwhile, is expected to add $319 million from its acquisitions of Florida-based Optimum Healthcare and New Jersey-based Stratus, which serves the insurance sector.
Unless the big five announce additional acquisitions, at least three analysts believe the mid-caps will outpace them in acquisition-led revenue addition.
“This is the year for mid-cap IT services firms as they are expected to double down on acquisitions more than what we can expect from their larger peers,” said Amit Chandra, vice-president of HDFC Securities.
Coforge leads
Much of the mid-cap momentum so far has come from Coforge.
In April, the Noida-based company acquired California-headquartered data analytics firm Encora for $2.39 billion, with the acquisition expected to contribute roughly $630 million in additional revenue this fiscal alone. The deal is expected to help Coforge achieve about $2.5 billion in annual revenue.
Four months later, bought Theory and Practice Business Intelligence Inc, a Vancouver-based data analytics firm, for $14 million. Last month, Hexaware Technologies Ltd closed its roughly $15 million acquisition of Consulting Professionals Services Holdings, a UK-based technology consulting firm.
Together, those two acquisitions are expected to add about $17 million in revenue.
Coforge, Mphasis and Hexaware ended FY26 with revenue of $1.87 billion, $1.8 billion and $1.54 billion, respectively, growing 29%, 7% and 8% year-on-year.
Next reshuffle
The revenue gap could widen further if Persistent Systems completes what would become its largest acquisition.
On 27 June, the Pune-based company announced plans to acquire for a proposed $1.3 billion. Once completed, the deal would create a combined $2.9 billion company operating as the Persistent-Nagarro Group and propel Persistent above Coforge and Mphasis to become India’s seventh-largest IT services company.
Persistent ended FY26 with revenue of $1.65 billion, up 17% year-on-year, while Nagarro reported $999 million last year, growing 2.8%. Nagarro follows the January-December financial year, unlike Indian IT firms, which follow April-March.
If successful, the acquisition would mark the second major reshuffle in India’s IT hierarchy driven by M&A.
The merger of LTI Infotech and Mindtree in 2022 created , now India’s sixth-largest IT services company. Coforge’s acquisition of Encora further cemented its position as the seventh-largest player.
The deal frenzy underscores an increasingly aggressive growth strategy among mid-cap IT firms.
Over the past eight months, Coforge and Persistent Systems have announced the largest acquisitions in Indian IT history, reinforcing analysts’ expectations that mid-caps could outgrow larger rivals through the acquisition route.
HDFC’s Chandra added that large acquisitions are a guaranteed and quick way to scale amid the AI-led demand.
At the same time, analysts also expect the big five to miss the full-year guidance they laid out in April after Accenture fell short of expectations due to fewer order wins.
A double whammy of AI-led fears and geopolitical tensions in West Asia has dampened investor sentiment, which has led analysts to believe that the big five may grow slower in the current fiscal.
The momentum is not entirely acquisition-driven.
Mid-sized IT firms have consistently outgrown their larger peers over the past two years.
In FY26, Infosys, HCLTech and reported revenue growth of 4.6%, 6% and 1.9%, respectively, while TCS and Wipro posted declines of 0.5% and 0.3%.
By contrast, India’s mid-sized IT firms recorded revenue growth of up to 30% on a full-year basis.
“2026 could well be the year when some mid-sized IT services firms add more visible incremental revenue than the large caps, but we need to be clear that this is being driven more by inorganic scale creation than by a broad-based demand recovery,” said Phil Fersht, chief executive of HFS Research.
Capital flexibility
Analysts say another advantage for mid-caps is their greater flexibility in deploying capital.
While India’s largest IT firms have spent more than $5 billion on acquisitions over the past 18 months, they remain constrained by shareholder payout commitments.
“Mid-caps are expected to add more incremental, primarily AI-led revenue than their larger peers mainly because they can deploy all of their cash generated towards large acquisitions, while large cap peers have fixed capital allocation policies, with specific allocation towards capital returns to shareholders via dividends and buybacks,” said Sushovon Nayak, lead IT analyst at Anand Rathi Institutional Equities.
He noted that the return nearly four-fifths of their cash to shareholders through dividends and buybacks. In FY26, the country’s seven mid-sized IT firms distributed about ₹5,500 crore through dividends and buybacks, while the big five returned almost 20 times that amount.
The race for scale comes as global rivals intensify competition.
Large IT companies, including Accenture Plc, are increasingly targeting mid-market clients with annual revenue of $300 million-$3 billion—a segment that has traditionally been the sweet spot for India’s mid-sized IT services firms.