Small Indian IT services firms are experiencing increasing performance divergence as weak deal momentum and sharper competition reshape growth patterns across the sub-$1 billion revenue cohort. According to reports from Mint, revenue growth slowed in fiscal year 2026 (FY26) compared with the previous year, with Sasken Technologies Ltd being the notable exception by doubling its revenue on acquisition-led growth. However, Birlasoft Ltd and Cyient DET reported their second straight year of revenue decline, while Mastek Ltd and Zensar Technologies Ltd grew at 3.1% each in FY26, significantly slower than their previous year growth rates of 10.9% and 5.4% respectively.
The performance divergence has resulted in significant changes to the segment's pecking order. As reported by Mint, CK Birla-owned Birlasoft Ltd ended FY26 with $597.5 million in revenue, down 6% year-on-year, which pushed Zensar Technologies Ltd ahead of Birlasoft as the fifteenth-largest IT services company. Most of Birlasoft's decline came from manufacturing clients, which account for a little more than a third of its business, marking its worst year in six years. The company reported deal wins worth $658 million in FY26, down 13.2% on year, attributed to sluggish deal wins and weak demand conditions.
The sector faces intensifying competition as smaller IT firms defend market share against larger peers while adjusting to rapid artificial intelligence (AI)-driven shifts in demand and client priorities. According to Mint reports, Zensar Technologies Ltd gained ground with revenue rising 3.1% to $643.7 million in FY26, with banks accounting for nearly half its business driving much of the growth. The company won its largest IT transformation deal worth $210 million from a financial institution, pushing order inflows to an all-time high in the January-March period. However, analysts note that revenue ramp from large deals is phased and competitive intensity has increased with Tier-1 vendors participating more actively.
The slowdown in small caps mirrors broader weakness across India's IT services sector, with mid-sized firms growing 5-30% last year, compared with up to 32% growth in FY25. As reported by Mint, large IT firms grew 1-6%, compared with a maximum of 4.3% in the preceding fiscal year. While shares of mid-sized IT firms fell between 14–36% since the start of the year, those of smaller firms fell between 17-27% over the same period, with Sasken being an outlier as its shares rose about 8% since the start of calendar year. The industry spans multiple revenue tiers, including six IT services companies earning $4-30 billion, seven in the $1-2 billion range, and seven between $50 million and $1 billion.
Despite challenges, some companies are positioning themselves for future growth through strategic acquisitions. According to Mint reports, nearly a third of Sasken's incremental revenue came from its largest acquisition of California-based IT firm Borqs International, completed in April 2025. Sasken's revenue almost doubled to $125.5 million, pushing it into the $100 million-plus bracket ahead of Nucleus Software Exports Ltd, which reported about $88 million in revenue last year. Industry experts suggest that engineering-focused firms like Sasken are positioned better when clients prioritize innovation budgets over discretionary transformation programs, as enterprises may delay large ERP modernization projects but cannot afford to pause investment in intelligent products and connected platforms.
