Midcaps Win the IT Growth Race

Midcaps Win the IT Growth Race THE BELAMY WEEKLY NEWSLETTER OF AIM Monday, May 12, 2025 | By Amit Naik The recent Q4 FY25 earnings season exposed a tale of two IT sectors within India Inc. While the Big Four of Indian IT—TCS, Infosys, HCLTech, and Wipro—talked up cautious optimism and macro headwinds, it was the mid-sized and smaller IT players who walked the talk. This time, the difference isn't just in margins or revenue estimates, but it's structural. Firms like Persistent Systems, Sonata, Tech Mahindra, Coforge, LTIMindtree, and Mphasis are doing what the giants are still "experimenting" with—closing GenAI-led deals, growing order books, and executing faster transformations. Here's why they are winning: Before we dive into the drivers behind their outperformance, here's a quick look at the top developments that made headlines this week:  ServiceNow's $1 billion GenAI playbook is a wake-up call for Indian IT—while the giants run pilots, ServiceNow is running revenue. India's smartphone exports surged past $18 billion in FY25, as Apple, Samsung, and Google ramped up local manufacturing. This solidified India's rise as the new global hub amid US-China tariff tensions and a booming PLI-driven ecosystem. Wells Fargo's phased exit from Chennai by 2027 signals a strategic shift toward deeper, talent-rich hubs like Bengaluru and Hyderabad, reshaping India's GCC landscape amid rising AI adoption and ecosystem consolidation. Now, let's explore some exciting collaborations and exclusive insights from the AIM ecosystem, presented with a unique twist beyond our regular editorial content. [Webinar alert] Learn how to run GenAI models like Llama, Whisper, and Stable Diffusion right on your PC—Intel and AIM will show you how to optimise LLMs on AI PCs using OpenVINO. Register now. India's debt collection industry is quietly becoming a magnet for top tech talent, as AI-led platforms like Spocto X reinvent collections to be faster, smarter, and more humane. Read more. AI is reshaping the future of work, where continuous learning, agentic systems, and human-AI collaboration define talent transformation in the 'Binary Big Bang' era. Read more. As AI becomes the new baseline, Accenture is leading the charge with a $1 Bn bet on upskilling through LearnVantage—powering a future where talent, not tech, drives transformation. Read more. Back to the big question—what's behind the midcaps' surge? When Platform Becomes Product At TCS, Infosys, and Wipro, discussions around GenAI are still filled with cautious optimism.  TCS CEO K Krithivasan said that most of their GenAI projects are still small to medium in scope. Infosys chief Salil Parekh said clients are experimenting, but scaling will take time. Wipro's Srini Pallia noted that they are seeing revenue impact from GenAI, but it's still too early to cannibalise these earnings. Contrast that with the midcaps: Persistent Systems filed 15 new patents this quarter, taking the total to 35, besides deploying its SASVA platform across regulated industries like BFSI and life sciences. The result? "20 straight quarters of growth. We are not prototyping—we're scaling," said Sandeep Kalra, CEO at Persistent Systems.  Meanwhile, Mphasis used its NeoZeta platform to clock significant wins from GenAI-led initiatives. "Our AI-led pipeline grew 86% YoY. Clients want results, not roadmaps," said Mphasis chief Nitin Rakesh. "59% of our Q4 deal wins were AI-led." Sonata Software is pursuing a $34 million pipeline in AI programmes with over 100 clients. "Our GenAI tools are already driving productivity at scale," Sonata Software chief Samir Dhir said.   Tech Mahindra turned a corner too, after a turbulent FY24. Their "AI Delivered Right" strategy has resulted in significant wins in telecom, manufacturing, and healthcare, and helped deliver $798 million in large deals in Q4. "AI is becoming table stakes. Our strategy focuses on business outcomes, not just experiments," said Mohit Joshi, CEO of Tech Mahindra. Not Just Agents—Agentic Execution Coforge isn't just experimenting with AI-led assistants—they are shipping them. Their Quazar marketplace now has 200+ AI/GenAI tools powering everything from airline alerts to insurance policy scans. "This is no longer about efficiency. It's about experience," said Coforge chief Sudhir Singh. L&T Technology Services (LTTS) embedded GenAI into chip design, predictive maintenance, and machine vision. "We have built copilots for silicon engineering, energy audits, and healthcare workflows," shared LTTS leadership Tech Mahindra, working with NVIDIA, deployed pharmacovigilance agents trained on medical literature and adverse event reporting. Behind the scenes, Persistent Systems founder and chairman Anand Deshpande pointed out that the company's investment in agentic AI, done well before the hype peaked, was now paying off. Even Cyient, often overlooked, turned its focus on AI-driven smart mobility, aerospace, and green hydrogen. "AI is the layer that makes our digital engineering platforms come alive," said Sukamal Banerjee, CEO of Cyient. The Deals Say It All The numbers make it clear—mid-sized IT firms are closing faster, sharper, and more AI-led deals than the giants. Coforge ended FY25 with a staggering $3.5 billion order book, including $2.1 billion in Q4 alone, much of it powered by AI deployments. LTIMindtree reported $6 billion in TCV for FY25 and $1.6 billion in the March quarter, though it hasn't broken out GenAI-specific contributions yet. Persistent Systems, focused on platform-first growth, clocked $329 million in Q4 TCV. It now targets $2 billion in revenue by FY27. Mphasis reported $390 million in deal wins, 65% of which were GenAI-driven. Tech Mahindra, despite its leadership transition, delivered a strong $798 million in large deals for Q4, 42% of which were AI-led. Sonata Software closed three large deals, including two with embedded GenAI platforms. Meanwhile, Infosys and TCS spoke about deal conversions, but the pace is uneven. Infosys is projecting just 0–3% growth for FY26, despite high AI adoption in conversations. The Leadership Behind the Numbers One thing mid-sized firms have in common? CEO stability and execution experience. Sudhir Singh has led Coforge since 2017, bringing years of experience working at Infosys and Genpact Nitin Rakesh has been at the helm of Mphasis since 2017 Sandeep Kalra, ex-HCLTech, took charge of Persistent in 2020 Amit Chadha has been with LTTS since 2009 and CEO since 2021 Samir Dhir, formerly of Capgemini and Virtusa, has led Sonata since 2022 Sukamal Banerjee joined Cyient in 2021 with a platform-first vision And the Big Four? Among the giants, HCLTech stands out as the most future-ready. Its AI Force, agent orchestrator UnO, and over 50 packaged AI agents on Google Marketplace are already delivering outcomes. "We have delivered billion-dollar GenAI outcomes—no exaggeration," said C. Vijayakumar, CEO of HCLTech.  Tech Mahindra, under Mohit Joshi, is rebuilding with intent. The company launched Project Indus, a proprietary LLM, and signed GenAI-led deals with Qualcomm, BT, and Amazon. "We are the only GSI to build a GenAI stack from scratch," said Tech Mahindra's Mohit Joshi.  But across the rest of the Big Four, the tone remains cautious. They are waiting for GenAI to mature. Midcaps? They are already billing it. For Brand collaborations, write to info@aimmediahouse.com You received this email because you signed up to the updates from AIM. Click here to unsubscribe if you do not want to receive emails from us.