Mid-market IT companies focus on short-term deals aimed at helping customers reduce costs, rather than pursuing large-scale projects. Representative | Photo source: REUTERS
Analysts say mid-market companies in India’s $254 billion IT sector have wrested market share from industry giants in recent quarters as customers cut discretionary spending amid inflationary pressures and economic uncertainty.
Unlike larger rivals such as Tata Consultancy Services and Infosys, mid-sized IT companies tend to focus on short-term deals aimed at helping customers reduce costs, rather than pursuing large-scale projects.
This practice has paid off amid slowing demand in top markets such as North America and Europe.
LTIMindtree, Coforge, Mphasis and Persistent Systems are “increasingly seen as contenders for (winning) Fortune 500 accounts, supporting the share acquisition process,” Kotak Institutional Equities said.
Smaller companies could further outperform larger rivals as discretionary spending improves, say Kotak analysts Kawaljeet Saluja, Sathishkumar S. and Vamshi Krishna.
This should position mid-market IT firms well to attract more budget-conscious customers in an economic context where U.S. interest rates may remain “higher for longer.”
Industry body Nasscom estimated that overall revenue growth more than halved to 3.8% last financial year.
“In the current macro environment, customers are increasingly turning their attention to service providers that deliver services at lower and predictable costs, driving 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 gain.
