Mid-level IT Firms Irk Major Ones In Big Deals

Bengaluru: Mid-tier IT services companies are increasingly bagging large contracts, leading to rising competition for their bigger counterparts. This trend has been growing in recent quarters as clients are looking for specific domain expertise for solving business problems in the current AI age. According to industry experts, large deals, no longer, stay as the exclusive domain of IT biggies and many mid-tier IT firms have successfully entered cracked the code in recent quarters.

“With AI reshaping client expectations now, clients are looking for faster outcome with performance-based pricing models. Many mid-tier IT firms have developed capabilities in specific technology areas, enabling them to bag large contracts. This trend is likely to further accelerate as AI adoption rises,” said a mid-level executive of a mid-tier IT firm.

In a recent interaction, engineering services firm L&T Technology Services’ management has indicated that the company is winning several large deals on the back of its tech-powered offerings to clients. In the fourth quarter, the ER&D firm won one $80 million plus deal and one $50 million plus deal.

This week, Sonata Software won $73 million deal from the US-based TMT Company for AI-led digital transformation.

Large deals are typically close to $100 million plus in revenue, which are spread across several years.

Not only large deals, some mid-tier IT services firms are able to bag mega deals, which are usually $1 billion plus in their revenue potential. For instance, Coforge bagged a mega 13-year deal worth $1.56 billion with Sabre Corp, which is a Texas-based travel technology company. As part of the deal, Coforge will handle the software product delivery for Sabre and will also execute AI-led tasks for the travel technology company.

According to sources in the know, mid-tier IT firms are giving steep competition to their large peers in the pricing front.

“Given the pricing advantage mid-tier IT firms provide, clients are preferring these companies over large firms for project implementation,” said the source.

Some other experts also opined that technology talent with better experience is helping mid-tier IT firms to clinch large deals.

“Mid-tier IT firms are deploying their senior talent or mid-level talent in project execution work. This is different from large IT firms, which are deploying many new hands with experience of 2-3 years for getting the pyramid right. This different approach of mid-tier IT firms is enabling them to bag large deals,” Pareekh Jain, an IT outsourcing advisor & Founder of Pareekh Consulting, told Bizz Buzz.