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

May 16, 2025

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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

  • Focused client approach
  • 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

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Prajwal Pandey
Research Analyst

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