Mid-tier IT companies are upping the ante as the technology world moves towards the AI era. When the generative AI era began with the public launch of OpenAI’s ChatGPT, commentators were sceptical about its disruptive impact on the Indian IT industry. Negative commentary emerged regarding mid-tier IT firms’ ability to withstand such disruption. Many opined that this era would favour bigger players because of its magnitude. And mid-tier and small companies would see a significant portion of their business vanishing in the coming years. As we are on the verge of entering 2026, all those doomsday predictions seem to have been thrown asunder.

Mid-tier IT firms have not only survived the ongoing AI-led developments, but many are also thriving. Some even are giving stiff challenges to their larger contemporaries by bagging massive deals. No wonder, the growth rate of many of them have outpaced the larger ones, all over again. In the second quarter of the current financial year, companies like Persistent Systems and Coforge have emerged as the fastest growing players with an average growth rate that is twice that of the industry. Coforge recorded a revenue growth rate of 26.6 per cent year-on-year, while Persistent Systems posted a growth rate of 17.6 per cent during Q2 of the current financial year. Similarly, Mphasis’ revenue grew 10.34 per cent during the second quarter. Many others have achieved revenue growth rate that is higher than their larger counterparts.

These figures indicate that mid-tier IT firms are adopting the new AI world quite well. A deep dive into the strategies of these companies show that they have some distinct focus areas in the AI space, which is serving them well. Firstly, mid-tier IT firms have been building their capabilities in certain specific areas. Unlike large companies, the approach of mid-tier IT firms is to be strong in some technology areas belonging to a sector. Such specialisation is prompting them to develop AI-powered solutions in that domain. Clients are preferring players, who have depth in areas that are relevant to their operations. In this way, mid-tier IT firms can compete with their larger counterparts. Secondly, they are providing better manpower to clients, ensuring superior project delivery and faster turnaround.

Large IT firms usually follow the pyramid approach as far as staffing for IT projects is concerned. It implies that there are several juniors at the bottom, mid-level staffers in the middle and some seniors on the top. In this way, big IT firms can get a sound margin. However, such a pyramid structure is generally not followed by mid-tier IT firms. They employ more mid-level or experienced staffers for project delivery as freshers’ intake by mid-level companies is not much compared to big IT services companies. When more experienced hands are deployed in a project, the delivery quality is generally higher. This difference in quality of staffers is attracting enterprises to work with mid-tier IT firms than big ones. Last but not the least, Indian mid-level IT services companies have been aggressive in the M&A space since last year.

Many are aggressively acquiring companies to build capabilities. Such capacity building through acquisition is helping them to develop their platforms and solutions in a customised manner for clients. During the second quarter, the deal pipeline of mid-tier IT companies has been robust, reflecting that these strategies are working well. As AI makes deep inroads, there should be no doubt about growth prospects of mid-tier IT companies in coming quarters.