Q4FY25 Review: Indian Mid-Tier tech companies showcase strong execution amid macro uncertainty – NASSCOM Community

Mid-Tier technology companies Analysis – Coforge, Persistent, Mphasis, LTTS and EXL

In Q4FY25, mid-tier Indian tech companies demonstrated improved performance despite global macroeconomic headwinds, tariff uncertainties, and cautious enterprise spending.

Let’s take a closer look at how these companies have performed

Key highlights

1. Q4FY25: Revenues increased by 4.4% q-o-q, second highest since Q2FY23.
2. FY25: Revenues grew 14.6% in FY25, compared to 6.4% in FY24 and 1.2x higher from FY23.
3. Growth Strategy: Increase in active client base by 11.7% in FY25; large deals momentum up by 1.5x over FY23.
4. FY26 Outlook: Maintain double digit revenue growth expectations for FY26.

Let’s delve deeper into each of these:

1. Revenues grew 4.4% q-o-q – Second highest since Q2FY23

• Strong momentum in core verticals – BFSI, Hi-Tech, and Telecom.
• Impact of tariff-related uncertainties leading to project deferrals – Retail, Travel & Logistics, and Manufacturing affected.

• Net margins – increased by 40 bps q-o-q driven by:

• Improved utilization.
• Cost optimization.
• Better deal execution and conversion.

• Headcount grew 1.9% sequentially; Net addition of 3,249 employees

• Attrition reduced by 20 bps q-o-q to 15.1% and down 90 bps y-o-y.
• Companies expect to continue fresher hiring in FY26:

• LTTS plans to onboard 2,500 freshers in FY26 – 500 joining in Q1FY26.
• Coforge indicated on hiring people with AI, analytics, and cloud related skills.
  • Persistent currently has 2,755 Salesforce certified experts, followed by Coforge with 830 and Mphasis with 231.

• Key vertical and geographical drivers

• Telecom and Hi-Tech revenue grew 12.3% q-o-q and 11.3% y-o-y. – led by increased demand for Gen AI enabled platforms, and large deals conversion.
• BFSI increased 4% q-o-q, 15.7% y-o-y – increased wallet share in existing accounts.
• North America revenue up by 3.8% q-o-q, while EMEA grew 2.2%.

• Deal Momentum: TCV expanded 2x to USD 3.03 Bn
  • Combined deal TCV (Coforge, Persistent, Mphasis) rose 2x q-o-q.
  • Surge in AI-led deal pipeline:
    • Mphasis: AI deals formed 65% of the total in Q4FY25, up from 25% a year ago.
  • BFSI remains a strong driver for large deals.
  • Companies reported no deal cancellations despite delays in ramp-ups.

2. Revenues grew 14.6% in FY25 compared to 6.4% in FY24

• Driven by deal conversions and focus on client mining.
• Increased demand for GenAI led platforms:
  • Ex. Persistent – Sasva, Mphasis: NeoZeta
  • Persistent’s Data & AI practice grew 50% YoY in Q4FY25.

• Net margins reduced by 20 bps y-o-y largely due to:
  • Third-party software license costs
  • Salary hikes and bonuses
  • Continued investment in AI (platforms and tools)

• Headcount grew 8.9% y-o-y, highest in the last two years
  • Net addition of 14,329 employees

• Client Strategy: Focus on USD 5–10 Mn segment

• USD 5–10 Mn client segment grew 17.2% in FY25. This suggests a strategic shift toward mid-sized client engagements.
• Increased wallet share from existing clients.

• Impact of AI
  • AI-led efficiency and automation are top priorities from clients.
  • Noticeable shift towards AI-centric deals across portfolios.
  • Companies are embedding GenAI, LLMs, and agent-based architectures into core delivery, moving beyond pilots to scalable platforms.

• Inorganic growth strategy – Targeted acquisitions focused on scaling operations, strengthening digital and domain-specific capabilities, and expanding into new geographies.

3. Growth Strategy: Increase in active client base by 11.7% in FY25

• Increase in active client base by 11.7% in FY25 compared to 7.3% growth in FY24.
• Strategic push towards mid-sized clients, particularly in the USD 5–10 Mn range, which grew 29% over the last two years.

• Large Deal wins: Increased 1.5x over FY23

• Leadership team expansion/changes – expert hiring from big techs in the last two years
• 

4. FY26 Outlook: Maintain double digit revenue growth expectations for FY26

• Maintain double digit revenue growth expectations for FY26; analyst projects ~15% growth in FY26 driven by:
  • Conversion of TCV to revenue expected to improve in FY26.
  • Operating leverage from large deals is expected to support margins.
• Tariff uncertainty likely to ease in the H1FY26.
• Two companies (Coforge and Persistent) projected to achieve USD 2 Bn revenue milestone by FY27.

Source:

• Company reports
• Analysts reports
• Secondary