Mid-Sized Indian IT Firms Expected to Outperform Large Peers
Nuvama and Systematix Institutional Equities project mid-sized Indian IT firms will outperform larger companies in Q2 FY27 despite macroeconomic headwinds and generative AI disruption.
Mid-sized and tier-2 information technology companies in India are projected to outperform their larger industry peers in the second quarter of fiscal year 2027. Reports from Nuvama and Systematix Institutional Equities indicate that while the broader sector faces challenges, smaller firms are better positioned for growth.
Nuvama predicts Persistent Systems will lead the tier-2 segment with 6.5 percent quarter-on-quarter growth in constant currency, followed by Mphasis at 3.1 percent and Hexaware at 2.5 percent. In contrast, Systematix Institutional Equities expects large-cap firms to see muted organic revenue growth between -1.5 percent and 2.0 percent, hampered by competitive bidding and AI-led pricing pressure.
The sector has faced significant volatility, with the IT index falling between 26 percent and 30 percent over the last nine to twelve months. This decline is attributed to macroeconomic instability, geopolitical tensions in the Gulf region, and fears that generative AI will disrupt existing business models. Nuvama noted that demand remained stable for most of the quarter but weakened in September 2026 due to these geopolitical risks.
Despite these pressures, analysts maintain a constructive long-term outlook. Nuvama asserts that generative AI will create larger opportunities for the services model. Systematix Institutional Equities suggests that margins for large firms may improve modestly through currency tailwinds and cost efficiencies, although high investment requirements could keep overall profitability under pressure.
