Mid-cap Indian IT services companies are expected to report a sequential revenue growth, in constant currency terms, of 0.5–4% for the December, 2025 quarter, as stabilising demand conditions and the slowing pace of contract ramp-downs provide modest relief after several muted quarters, analysts said.
Experts suggest the December quarter will be characterised less by any cyclical recovery in technology spending and more by execution of deals signed earlier, particularly vendor consolidation and cost-optimisation programmes. Discretionary spending remains tight across most client segments, experts observed.
What do analysts suggest?
Analysts added that ramp-downs in existing books of business are slowing even as demand conditions stabilise. Seasonal furloughs are expected to be broadly in line with historical trends, limiting sequential gains. They also noted that while deal pipelines remain healthy, revenue visibility is still driven by ramp-ups rather than fresh discretionary wins.
“Demand drivers remain unchanged, with limited improvement in discretionary spends, and primarily driven by cost optimization priorities of clients,” analysts from Kotak Institutional Equities said.
Margins across mid-cap IT companies are expected to remain uneven in Q3FY26, with EBIT margins ranging from the low-teens to mid-teens. While currency tailwinds and operating efficiencies are likely to provide partial support, their impact is expected to be outweighed at some companies by the full-quarter effect of annual wage hikes and seasonal furloughs.
Persistent Systems to take the lead
Among the mid-caps, Persistent Systems is expected to lead the pack, 2-4% QoQ constant-currency revenue growth, supported by ramp-ups of large deal wins and seasonally strong renewal activity.
KPIT Technologies is expected to continue benefiting from structural demand in automotive software and engineering services, though quarterly growth could remain uneven due to milestone-based execution. Coforge is expected to report marginal sequential growth, driven by ramp-up of earlier BFSI deal wins, while Mphasis is expected to see a sequential improvement as headwinds in the logistics vertical bottom out and deal ramp-ups support growth, though decision-making delays remain a constraint.
Analysts expect AI-led and agentic AI solutions to increasingly shape deal structures and competitive positioning for mid-cap IT firms, even if near-term revenue acceleration remains gradual, much like the trend for large caps in the sector
“GenAI and Agentic AI solutions are widening TAM (total addressable market) for mid-cap IT services, helping them stich larger deals and compete with large-cap players on pricing,” analysts from ICICI Securities said.
Analysts also noted AI adoption is beginning to influence delivery models and productivity metrics, though the revenue impact is still evolving.
Experts suggest that for the time being AI will remain a medium-term lever — expanding deal scope, improving utilisation and supporting margins — rather than an immediate catalyst for faster topline growth.