Many other mid-cap IT firms are also eyeing an entry into the billion-dollar club in the coming quarters while the above-mentioned four are chasing the next target of $2 billion, industry observers said. Firms such as Happiest Minds Technologies, Cyient, ITC Infotech and Birlasoft announced their billion-dollar revenue target recently.
Experts said some small and mid-cap firms have managed to buck the overall industry trend and outperform their larger peers in terms of higher growth and profitability mainly due to their specialisation in certain niche segments and sectors.
LTTS and Sonata Software crossed the billion-dollar milestone in FY24.
“We doubled down our strategic relationship with Microsoft and that helped us to be here,” Sonata Software CFO Jagannathan CN said. The firm harvested hi-tech and retail verticals while its acquisition of Quant helped increase its BFSI and healthcare business, he said, adding that the firms also announced 14 large deals last year. “Large deals for us are those that are above $5 million TCV (total contract value),” Jagannathan said.
Most firms are going for acquisitions as they chase the billion-dollar goal. ITC Infotech, for example, recently acquired Blazeclan Technologies, while Happiest Minds acquired Aureus Tech Systems, PureSoftware, and Macmillan Learning India.
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Sudip Singh, managing director and CEO of ITC Infotech, said the firm is confident of touching the billion-dollar milestone in the next 4-5 years, buoyed by top quartile profitable growth over the last five years on the back of industry specific capabilities. “For us, $1 billion is just a pit stop in our journey to help our clients meet their digital transformation goals while staying invested in upskilling our employees,” he said.
Happiest Minds Technologies, after posting robust growth numbers for FY24, said it will reach the $1-billion revenue goal by 2031 with a 22% CAGR (compounded annual growth rate).
Phil Fersht, CEO and chief analyst of research and analysis firm HFS Research, said mid-caps will grow rapidly to $1 billion and $2 billion. “Most enterprises are bringing the midcaps into the conversation because they bring certain specialisations to the table, they can take on smaller deals, and offer more personalised support from their C-suites,” he said.
“I can see many of them growing rapidly to the $2-billion level, where it gets harder to be as client-focused and the growth slows.”
Peter Bendor-Samuel, chief executive of consultancy firm Everest Group, however, is more cautious about his predictions for mid-caps. “It seems unlikely that all of them can get these aggressive goals,” he said.
