Mid-Tier IT Firms Poised to Outshine in 2026's Fourth Quarter

Centrum’s report reveals that Tier 2 IT service companies are set to surpass Tier 1 peers in revenue growth for Q4 FY26. Strong operational execution and strategic vertical strength forecast higher gains for mid-tier firms, despite a stable demand environment. Revenue drivers include AI adoption and Gen AI solutions.

Selected Tier 2 IT service companies are projected to outpace Tier 1 counterparts in revenue growth for the fourth quarter of fiscal year 2026, a report by Centrum indicates. Despite steady demand over the past quarter, mid-tier firms benefit from operational strengths and specialize in verticals, showing superior momentum.

The report predicts a revenue growth in USD terms for Tier 1 IT companies between -0.5% and 1.2%QoQ, while Tier 2 companies are expected to achieve between 1.3% and 3.4%. Persistent Systems leads the mid-tier forecasts with a 3.4% growth rate, whereas Tata Consultancy Services is at the forefront for Tier 1 with a 1.2% increase.

The report also highlights automation tools' impact on traditional IT business models and notes the growing significance of AI. Despite longer decision cycles due to AI cautiousness, the market is expected to grow to USD 300 billion by 2030, providing substantial opportunities alongside deflationary effects on productivity.

Operating margins remain stable due to the Indian Rupee's depreciation against the US Dollar. IT companies are establishing units for Gen AI solutions, which are becoming crucial to business growth. Major companies like Infosys and Wipro anticipate varied revenue growth, with Infosys projecting a 3-6% increase and EBIT margins of 20-22% for FY27E.

(With inputs from agencies.)