AI Helps Smaller IT Firms Break Into India’s Mega Deal Market

For decades, the Indian IT industry ran on an unspoken hierarchy. A $500-million outsourcing contract went to TCS, Infosys, or Wipro, not because clients had formally ruled out everyone else, but because only the giants had the human resources, the delivery infrastructure, and the balance sheets to absorb contracts of that size.

Deal scale was, in effect, a moat. Artificial intelligence is now dismantling that moat, and the evidence is showing up in a string of deal announcements that would have seemed improbable three years ago.

“There's clarity that needs to come around how large-cap IT stocks will position themselves or how they will strategise this AI play going forward, because a lot of mid-cap IT stocks are now competing on very large deals,” Rishab Khandelwal, Founder and CEO at Sabiduria Capital, tells AIM. “The point is that some of the deals are now getting democratised because of AI.”

In March last year, Coforge, a Noida-based mid-tier firm, signed a 13-year partnership with Sabre Corporation, the US travel technology giant. The deal was valued at $1.56 billion. Coforge's entire revenue for fiscal year 2024 was $1.05 billion. 

Coforge followed that up less than a year later, in February 2026, with a $158 million, five-year contract from a UK-based client. “AI-led conversations focused on driving innovation, improving governance, and resiliency are helping drive a material increase in the number and median size of large deals in play across Europe,” John Speight, President of Coforge and Europe Business Leader, says in a statement.

In Q4 of FY25, Coforge signed 14 large deals across North America, the UK, and Asia-Pacific, pushing its 12-month executable order book up nearly 48% year-on-year to a record $1.5 billion.

Also, Zensar Technologies secured a major 5.5-year framework contract worth roughly $210 million from a large financial services client in early 2026. This deal focuses on AI-led automation to transform enterprise operations.

LTIMindtree has been on an equally striking run. In May 2025, it won a $450 million, seven-year contract with US agribusiness giant Archer Daniels Midland. Five months later, in October 2025, it announced its largest-ever deal, a $580 million contract with Paramount Global, the US media and entertainment group. 

It followed that with a $100 million multi-year deal with a US chemicals and polymers manufacturer in late 2025.

In March this year, Mastek secured a major framework engineering contract with the UK Home Office valued at over $110 million.

Gaurav Vasu, CEO and Founder of UnearthInsights, says there’s no longer a concept of deals being exclusive to large or small clients. It’s now client-dependent, and service providers can’t do much about it. Previously, billion-dollar or half-billion deals were reserved for big players, but that’s no longer the case.

“Also, most of the deals are now small because clients aren't awarding big deals. They don't know the situation in AI and are watching, which is why the deal dynamics have changed,” he adds.

Tech Mahindra, traditionally considered a Tier-1 firm but long a laggard in deal momentum, in December 2025, won a $500 million, five-year telecom modernisation deal with a major European telecommunications operator, embedding agentic AI into the operating model via a proprietary orchestration platform, and posted $1.09 billion in deal wins for the quarter, up 47% year-on-year. 

The company closed FY26 with its highest deal wins in five years, at $3.79 billion.

Meanwhile, Persistent Systems maintained 23 consecutive quarters of revenue growth, with Q3 FY26 revenues up 17.3% year-on-year. Its deal wins in that quarter included a $100 million contract with a US tier-1 bank and a $50 million engagement in pathology and laboratory automation.

Why AI Changes Who Can Compete

The traditional logic of large IT deals was rooted in delivery capacity. A decade-long contract to manage a global bank's technology infrastructure requires thousands of engineers across geographies and continuity through leadership cycles. Only firms with a large number of employees could credibly make that promise.

Industry executives noted that AI is compressing that requirement. When coding tools can generate, review, and test software in a fraction of the time a human team would need, the headcount required to service a given contract shrinks substantially.

As mid-cap firms move up to compete with the tier-1 giants, they vacate space that smaller companies are now rushing to fill. 

Multiple IT firms in the sub-$500 million revenue bracket have also flagged that they are now bidding on engagements previously limited to names like Persistent or Coforge.

Avantika Krishnan, chief sales officer at small-cap IT firm Saksoft, emphasised during a quarterly earnings call that the company competes not only with larger players but also distinguishes itself through flexibility. Due to their size, they are known for their quick turnaround time and agility, which customers appreciate and which helps create a unique position in the market.

Question for the IT Giants

The tier-1 firms are not standing still. Infosys recorded large deal wins of $14.9 billion in FY26, while TCS demonstrated a total contract value of $40.7 billion for FY26 and $12 billion in Q4, with 3 mega deals in the quarter and 5 for the year.

Yet the market is asking pointed questions about where they go next, especially after AI giants OpenAI and Anthropic announced joint ventures focused on enterprise-level deployment of services. 

The structural advantage that the IT firms built on massive headcount and vast delivery infrastructure now carries friction costs in an era where delivery productivity is rising faster than deal volume. Reskilling hundreds of thousands of employees takes years, and if AI compresses delivery costs, clients will eventually expect that efficiency to be priced in.

"The clarity that needs to emerge is how the large-cap guys will position themselves in this AI play," Khandelwal notes.

For mid-cap and smaller IT firms, the window is open. Whether they have the domain expertise, client relationships, and AI delivery platforms to convert competitive bids into durable partnerships is the next test.