Mid-tier IT firms tend to focus on short-term deals aimed at helping clients cut costs rather than chase large-scale projects. Representational
| Photo Credit: REUTERS
Mid-tier firms in India’s $254 billion IT sector took market share from industry goliaths in recent quarters as clients curtailed discretionary spending amid inflationary pressures and economic uncertainty, analysts said.
Unlike larger rivals such as Tata Consultancy Services and Infosys, mid-tier IT firms tend to focus on short-term deals aimed at helping clients cut costs rather than chase large-scale projects.
The practice has paid off in an environment of slowing demand in prominent markets such as North America and Europe.
LTIMindtree, Coforge, Mphasis and Persistent Systems are “increasingly viewed as challengers in (winning) Fortune 500 accounts, aiding the share gain process,” Kotak Institutional Equities said.
The smaller firms could outperform larger rivals further once discretionary spending improves, Kotak analysts Kawaljeet Saluja, Sathishkumar S. and Vamshi Krishna said.
This should set mid-tier IT firms up well as they try to win more budget-conscious clients in an economic backdrop where U.S. interest rates may stay “higher for longer”.
Industry body Nasscom estimated overall revenue growth more than halved to 3.8% last financial year.
“In the current macro environment, clients are increasingly looking at service providers (that) deliver services at lower and predictable costs with better business outcomes,” said Avinash Baliga, partner at consulting firm Avasant. Persistent Systems CEO Sandeep Kalra and Mphasis CFO Manish Dugar confirmed the market- share gains.