Is Gap Between Large, Mid-Tier IT Firms Narrowing? Answer Lies in AI Deals

India’s IT services industry appears to be in an inverted trend when it comes to scoring deals. Large firms are increasingly taking on smaller AI-led transformation programmes, while mid-tier companies are beginning to win larger contracts that were once dominated by the biggest providers.

Recent deal announcements and client-bucket data suggest that large IT providers are widening their pursuit of smaller programmes, particularly those linked to artificial intelligence (AI) experimentation and digital transformation.

At the same time, mid-tier services firms are announcing a string of nine-digit contracts as they attempt to scale their presence in larger enterprise engagements.

Industry analysts say the shift reflects two powerful forces reshaping enterprise technology spending—macroeconomic uncertainty and the structural disruption caused by AI.

Tier-2 Firms Bag Larger Contracts

In recent weeks, several mid-tier Indian IT companies have disclosed contracts exceeding $100 million.

Last month, Pune-based Zensar Technologies secured a $210 million deal with a large financial services company for a period of 5.5 years.

LTM (formerly LTIMindtree) announced that it had won a $100 million contract from a European medical technology platform.

Coforge disclosed a $158 million contract with a UK-based client for a five-year period. Soon after, the company also announced a strategic partnership with US-based VHC Health.

The spate of announcements has raised questions about whether mid-tier companies are increasingly competing for larger deals. However, analysts caution against interpreting these deals as mega contracts.

“First, we need to define what qualifies as a ‘large deal’,” Gaurav Vasu, Founder of cognitive intelligence platform UnearthInsight, tells AIM.

“In industry terms, a large deal is typically $500 million to $1+ billion in total contract value. A $100 million deal over five years works out to about $20 million annually—that is not considered a large deal by market standards.”

Vasu notes that tier-2 firms, which typically operate with $1–5 billion in revenue, usually pursue contracts in the $10–500 million range, which aligns with the size of the recent announcements.

“Most tier-2 firms, such as Coforge or Persistent, are themselves $1–2 billion revenue companies. Logically, they pursue deals in the $10 million to $500 million range,” he said.

Still, analysts say these wins should not be interpreted as a dramatic shift in the industry hierarchy.

“This is definitely not a flip,” Shivaraj KM, Principal Analyst at ISG, observes. “Mid tiers are winning large deals in some pockets where their niche lies. At a larger scale, we do not see a big movement in the way tier ones and mid-tier wins.”

Large IT Firms Pursue Smaller Deals

At the same time, tier-1 companies, including TCS, Infosys, HCLTech, and Wipro, are increasingly participating in smaller engagements tied to AI and digital innovation.

For instance, TCS reported 1,383 clients generating over $1 million in annual revenue in Q3 FY26, up from 1,336 in Q1. The company also had 721 clients above $5 million—an increase from 714 in the first quarter. However, the number of clients in higher-revenue brackets such as $10 million, $50 million and $100 million remained largely unchanged.

Similarly, HCLTech reported 968 clients in the $1-million-plus category in Q3 FY26, an increase from 956 in Q1. It had 421 clients above $5 million and 268 above $10 million in Q3, up from 402 and 255 in Q1, respectively.

Infosys’s $1-million-plus bucket remained largely unchanged at 1,012 clients. It reported modest changes only in the $10+ million bracket with 326 clients, compared with 317 in Q1. Wipro showed a similar trend.

These figures show how large providers continue to operate across the full spectrum of deal sizes.

“Tier-1 firms such as TCS, Infosys and Accenture operate across all deal sizes—mega deals, mid-sized deals and smaller ‘tail’ accounts,” Vasu notes. “They have always played across segments. It’s not accurate to assume they are only chasing large deals.”

The Overlap

This distribution of clients also reveals where the competitive overlap between large and mid-tier firms is emerging. It is most visible in mid-sized client segments, particularly accounts generating between $1–20 million annually, where both groups maintain a strong presence, at least in the last three quarters. 

Tier-1 firms continue to serve a broad base of such clients alongside their large strategic accounts, while mid-tier companies are steadily expanding within the same revenue bands as they scale their client portfolios. At the same time, competition is intensifying when it comes to mid-sized deals as several mid-tier firms are building a growing set of clients above the $20 million and $50 million thresholds—segments historically dominated by larger providers.

For instance, LTM, Coforge, and Tech Mahindra continue to derive a significant portion of their client base from the $1–5 million revenue bracket, while steadily expanding their presence in the $5–10 million and $10+ million segments. At the same time, these companies are gradually building a smaller but growing cohort of clients contributing over $20 million and $50 million annually.

AI is Reshaping Deal Structures

Beyond deal size, the structure of enterprise contracts is also changing.

Ashwin Venkatesan, Executive Research Leader at HFS Research, points to two factors that are influencing how enterprises commit technology budgets today.

“The first is macroeconomic fragility,” he says. “Global election cycles, supply chain realignments, and potential energy disruptions are creating a cautious investment environment.”

Such uncertainties can delay enterprise spending on large multi-year transformation programmes.

“The second force is structural disruption from AI,” Venkatesan adds. “Enterprises know automation will reduce portions of traditional run-and-operate work. As a result, they are increasingly reluctant to sign large labour-heavy outsourcing contracts.”

Instead, many enterprises are beginning with smaller programmes. “What we are seeing in deal patterns is a shift in both size and structure,” he observes.

“Mega deals are fewer, but sharper in intent. At the same time, there is a rise in smaller modular programmes such as three-to-twelve-month AI pilots, targeted workflow automation programmes, data modernisation efforts and early agentic AI use cases.”

These initiatives often start as experiments before expanding into broader transformation programmes.

Evolving Services Value Chain

Both large and mid-tier providers are now adjusting their strategies.

Tier-1 firms remain best positioned to win large vendor-consolidation programmes involving complex legacy modernisation and multi-vendor orchestration. However, they are increasingly pursuing smaller AI-led engagements that can serve as entry points into larger transformations.

Meanwhile, tier-2 firms are trying to differentiate through domain expertise and proprietary accelerators rather than labour-based outsourcing.

“There is some inversion happening, but the market has not completely flipped,” Venkatesan states.

“Tier-1 providers are going down market more frequently because many innovation budgets are now tied to AI, data, and digital programmes that start as smaller pilots before scaling.”

At the same time, enterprises are becoming more comfortable with multi-provider delivery models, creating opportunities for smaller firms to participate in larger programmes.

More broadly, the services industry itself is changing.

“Historically, services firms implemented and operated enterprise technology platforms,” Venkatesan recalls. “Today, AI embedded within those platforms is automating portions of run-and-maintain work.”

As a result, the value pool is shifting. “Services providers now need to focus on designing AI-infused workflows, orchestrating across multiple AI platforms, and managing governance and guardrails,” he adds.

“In this environment, deal size alone matters less than where the provider sits in the transformation journey.”