Revenue Pressure Hits Mid-Tier IT Cos

Mid-tier IT firms have to win large deals for increasing their revenue at a faster pace. It means their competition with large firms is likely to intensify. So, it has to be seen what strategies they devise to beat the competition - Pareekh Jain, Founder of Pareekh Consulting, tells Bizz Buzz

Bengaluru: Mid-tier IT services firms’ quest to grow their revenues from the current level has many twists as they have to increasingly compete with large-tier companies for accelerating their top lines.

Experts are of the opinion that as the top line grows, the difficulty of growing it at a rapid pace increases due to base effect. Moreover, they have to win large deals competing with top-tier IT firms, which have specialist sales team focussed on winning large projects.

Many Indian IT services firms are currently eyeing $2 billion revenue mark in next two-three year, after crossing $1 billion mark in past years.

For instance, Coforge, which is one of the fastest growing mid-tier IT firms, is eyeing to achieve $2 billion revenue mark by around FY27.

Similarly, Persistent Systems is another mid-tier IT firm which is aiming to reach $2 billion revenue mark by fiscal 2027. Both Coforge and Persistent Systems have seen rapid rise in their stock prices as investors are expecting sound growth in their revenue and margins in coming years.

Similarly, L&T Technology Services is another mid-tier engineering services company that is aiming to achieve $2 billion in the medium-term. Apart from these companies, there are several mid-tier firms, which are inching to achieve $1 billion revenue mark in next two-three years. For instance, Birlasoft is eyeing to achieve $1 billion revenue mark in next two-three years according to company’s management.

While many mid-tier IT services companies are trying to reach $1 billion or $2 billion revenue marks, companies like LTIMindtree and Tech Mahindra are trying hard to join the big boys’ club.

For instance, LTIMindtree is now setting its eye on achieving $10 billion revenue mark in the coming years.

According to the CEO of LTIMindtree, the company eyes $10 billion revenue mark by 2032.

By building on scaling up key verticals like BFSI and tech, mining Fortune-500 accounts further and through harnessing deep horizontal capabilities particularly in the areas of data and analytics, experience, core and cloud, the company wants to achieve the $10 billion revenue mark.

Experts said while there are many opportunities to grow their revenues, the climb will be increasingly tough owing to tough competition.

“Mid-tier IT firms have to win large deals for increasing their revenue at a faster pace. It means their competition with large firms (like TCS, Infosys, Wipro, HCLTech, Accenture, Cognizant, IBM) is likely to intensify. So, it has to be seen what strategies they devise to beat the competition. Because, in many cases, they have to snatch deals from large firms. Secondly, differentiated service offering will give an edge over others,” Pareekh Jain, an IT outsourcing advisor & Founder of Pareekh Consulting, told Bizz Buzz.