Now Reading: Mid-cap IT firms outpace large caps in bank revenue growth
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Mid-cap IT firms outpace large caps in bank revenue growth
India's mid-sized IT services firms are growing revenue from banks and financial institutions faster than their larger rivals, according to a Mint analysis of company financials for FY20-FY26. Coforge and Persistent Systems…
India's mid-sized IT services firms are growing revenue from banks and financial institutions faster than their larger rivals, according to a Mint analysis of company financials for FY20-FY26. Coforge and Persistent Systems more than doubled BFSI income, while LTM (LTIMindtree) and Mphasis also logged strong compounded annual growth rates (CAGR) of 9-23%.
By contrast, the top five large-cap firms, TCS, Infosys, Wipro, Tech Mahindra and HCLTech, saw BFSI revenue grow at a slower CAGR of 5-8%. Analysts attribute this to large banks insourcing tech work via global capability centres in India and consolidating vendors, while mid-caps serve smaller challenger banks that are still boosting tech spend from a low base.
Mid-caps are also more commercially flexible and can move faster on contracts, experts say. Total cumulative staff at the GCCs of JPMorgan, Citibank and Morgan Stanley now exceeds 1,00,000, cutting large-caps' share of bank IT work.
Indian Opinion Analysis
The four mid-caps named, Coforge, Persistent, Mphasis and LTI (now LTIMindtree), are all focused on a narrow set of clients: challenger banks in the US and Europe that are still digitising core operations. By contrast, the large-cap firms serve global systemically important banks such as JPMorgan and Citibank, which now run their own Indian global capability centres (GCCs). As of 2024, GCCs in India employed over 1.6 million people, and banks alone account for a significant share. The crux is not just base effect, mid-caps are gaining share because large banks are actively insourcing, while mid-caps offer lower commercial friction. The pattern to watch will be the next quarterly earnings season: if mid-cap BFSI revenue continues to grow at twice the large-cap rate, the structural shift is real and not just pandemic-era catch-up.
Source: livemint.com
This brief was synthesised by AI from the source linked above.
