Mid-Tier Firms Again Beat Indian IT Majors in Q1—But With a Catch

India's biggest IT services companies just closed another quarter of near-stagnant growth. TCS's constant-currency revenue rose a bare 0.4% sequentially, Wipro's core services business barely moved, and Infosys cut its full-year growth guidance.

A tier down, the growth stories seem to come from a different industry altogether.

Coforge grew revenue 49% year-on-year, Mphasis and Persistent Systems both posted mid-to-high-teens growth, and all three are leaning hard on AI-linked deal wins.

The persistent divide between India's large-cap and mid-tier IT firms widened further in the June quarter, though analysts caution the mid-tier growth numbers themselves tell two very different stories.

Large Caps: Modest Growth

Tata Consultancy Services closed Q1 FY27 with revenue of $7,624 million, essentially flat QoQ and up 2.7% YoY in dollar terms. Constant-currency growth decelerated to just 0.4% QoQ, continuing a slowdown visible across the last several quarters following the post-pandemic peak.

In rupee terms, the headline number looked healthier as revenue rose 13.93% YoY to ₹72,275 crore, though net profit grew a comparatively modest 4.6%, a gap that reflects rupee depreciation more than any acceleration in the underlying business.

TCS did add roughly 9,300 employees during the quarter, its strongest hiring in over three years, and reported total contract value of $9.5 billion, with CEO K Krithivasan expecting demand to improve from Q2, particularly in the BFSI space.

“…overall, we are still optimistic that the demand will resume at some time in Q2, primarily because our customers have a significant amount of pent-up technology backlog to be completed,” Krithivasan told analysts during the earnings call.

Infosys, meanwhile, reported Q1 FY27 dollar revenue of $5,082 million, up 2.8% year-on-year in constant currency and 1% sequentially. In rupee terms, the consolidated net profit rose 12.2% YoY to ₹7,769 crore, with revenue from operations up 14% YoY to ₹48,211 crore.

The more telling move was on guidance: the company trimmed its FY27 constant-currency revenue growth guidance to 1.5–3.0% from 1.5–3.5%, citing softer volumes, the termination of a client contract, pricing pressure, and macro uncertainty, even as it held margin guidance steady. AI-related revenue accounted for 8.2% of the total.

HCLTech posted Q1 revenue of $3.6 billion, up 13.94% year-on-year in rupee terms and 2.6% in constant currency, supported by financial services, technology, and retail demand, but the company also recorded a 0.5% sequential decline in constant currency, which management linked to delayed discretionary spending. 

Not-So-Mid

Coforge posted the sector's standout headline figure, but its composition explains why analysts are cautious about treating it as a like-for-like comparison.

Reported revenue of ₹5,527.7 crore was up 49.2% year-on-year, and 33.3% in US dollar terms, but the acquired Encora business—consolidated only from May 1, 2026—contributed $100.7 million of the quarter's $592.2 million revenue.

Stripped of the acquisition, organic constant-currency growth was just 1.1% sequentially, rising to 5.2% once two planned portfolio exits were excluded.

On profitability, though, the integration looked clean. EBIT margin reached 16%, above the company's own FY27 guidance of 15.5%. 

Coforge said AI-led engineering, data, and cloud services together accounted for 86% of Coforge’s revenue in the quarter. AI-led Engineering alone made up 50.4% of revenue by service line, up from 45.9% in the year-ago quarter.

On the other hand, Mphasis presented the more organic side of the mid-tier story. Its consolidated revenue rose 17.5% year-on-year and 3.3% sequentially to ₹4,384.05 crore, with constant-currency growth of 8.3% year-on-year and 2.1% sequentially, alongside new TCV wins of $461 million, 63% of it AI-led.

Mphasis CEO Nitin Rakesh tied the quarter directly to the company’s Tria enterprise agency platform push, saying early adoption. Management also expects sequential growth to accelerate further into Q2.

Persistent Systems kept up its own multi-year run. Revenue reached $452.4 million, up 16.1% year-on-year and 3.8% sequentially—the company's 25th consecutive quarter of revenue growth—with a record quarterly order intake of $1.15 billion in total contract value.

Consolidation Wave

The quarter also carried a strategic marker for the mid-tier segment's own consolidation wave. Persistent signed a business combination agreement with digital engineering company Nagarro, a deal expected to close by the end of this year or Q1 CY27.

Gaurav Vasu, CEO of research firm UnearthInsight, says the pattern is structural rather than a one-off.

"Mid-tier IT firms have consistently outperformed large-cap players over the last few years, and this is likely to continue because they are operating from a much smaller base," he says, noting that a company generating roughly $2 billion in annual revenue needs a fraction of the incremental billings that a $30-billion company like TCS needs to post the same percentage growth. "As companies become larger, sustaining the same percentage growth naturally becomes more challenging."

But Vasu is emphatic that the mid-tier growth numbers shouldn't be read as a single trend.

Coforge's 49% headline and Mphasis's expansion, he says, are "two distinct stories within the mid-tier segment" — one helped by acquisitions, the other on organic execution in a tightly focused book of business.

He also flagged how differently the two firms are positioned. Coforge as an AI-native, product-engineering-led player spanning BFSI, insurance and travel (anchored by its Sabre relationship), with healthcare and hi-tech added via Cigniti and Encora, whereas, Mphasis is seen as a more BFSI-concentrated, US-centric business with a fast-growing insurance book.

On AI specifically, Vasu points out that Coforge's Quasar platform family has pushed AI-led revenue to 86% of the total, while Mphasis's newer Tria platform accounted for 63% of Q1 deal wins. "They deserve to be judged on their respective models rather than on a single blended growth figure," Vasu says.

He is also cautious about extrapolating Coforge's current pace once Encora's contribution laps itself in the year-on-year base. "The current growth rate is unlikely to sustain once the Encora acquisition is fully reflected... growth normalising to around 13–14%," he says, though he expects that to remain roughly double the 3–5% pace of the broader IT services industry.

Praveen Bhadada, MD and CEO of consulting firm Neovay Global, broadly agrees that base effects explain most of the gap that "most mid-caps are a fifth to a twentieth the size of the large caps, so they naturally grow faster. It's also not one uniform story, and different companies carry a different growth profile.”

However, he flags a common thread across the whole sector regardless of size: growth rates for both tiers have cooled relative to the COVID-19-era demand surge. "There is pressure in the business, and it is being felt across the board," he says.

Even with sharply different growth models, AI adoption shows up as a theme across every company in this quarter's results. Whether that translates into a genuinely different growth trajectory for these companies, or simply cushions margins while headline growth stays in low single digits, is likely to be the central question for the rest of FY27.