Three of India’s mid-sized IT companies—Persistent Systems Ltd, Hexaware Technologies Ltd and Firstsource Solutions Ltd—are looking to scale up their business and employ more people outside the US, which makes up more than three-fifths of their business. This mirrors the trend of their larger peers shifting their focus from the US to Europe and growth markets including Asia and South Africa.
From acquisitions and large deals to strategic employee hubs, India, Australia, South Africa and West Asia are emerging as the key hotspots for these mid-sized IT services companies earning $1 billion to $5 billion in revenue as they look to insulate themselves from macroeconomic tensions and tap new growth markets.
Persistent Systems, the country’s ninth-largest IT services company, got about 80% of its $1.41 billion revenue from North America. About 8% came from Europe, whereas 1.7% came from the rest of the world.
“Management highlighted high exposure to North America and is focused on diversifying through potential acquisitions in Europe (revenue range of $100-500mn) and Japan (revenue range of $10-15mn). The focus is on valuation, cultural fit and geo-diversification,” JM Financial analysts Rajiv Berlia, Nandan Arekal and Anushree Rustagi said in a note dated 25 March after speaking to Persistent Systems' chief financial officer Vinit Teredesai.
Hexaware Technologies, the 10th-largest IT services company, landed its first client in New Zealand in the July-September 2025 period, after saying expansion to growth markets was one of its four key strategies.
“The fourth (strategy) was to make our Middle East and India markets count more. And I think the last one, especially in the light of global macros, there is additional conviction that these markets, India and Middle East, will be more decoupled from world macros than other economies,” chief executive officer Ramakarthikeyan Srikrishna said during Hexaware’s post-earnings analyst call on 29 April 2025.
Tech spending curbed
Geopolitical tensions have hurt the supply chains of companies based in North America that are clients of IT services companies. They are also prone to regular changes in tax laws.
Both cases have prompted client companies to hold back their tech spending, thereby impacting the revenue of IT outsourcers. De-risking from such client concentration and entering new markets have become the key reasons for IT service companies to shift their gaze to growth markets outside the US.
“The Asia/Africa market is growing faster than North America and Europe. This makes it attractive for mid-market firms to enter those markets. They are also adding more focus to Asia as North America and Europe slow,” said Peter Bendor-Samuel, founder of Everest Group, adding that acquisitions are the easiest way to expand in such markets.
Last year, Hexaware got 5.8% of its $1.54 billion revenue from the Asia-Pacific region. Hexaware, which follows a January-December financial calendar as against the April-March calendar followed by its peers, does not disclose revenue from India and West Asia specifically but clubs them under Asia-Pacific.
While acquisitions and adding clients are certain ways to increase their footprint in new markets, mid-sized IT companies including Firstsource Solutions are eyeing growth markets as new employee hubs.
“A bunch of our UK as well as US customers are very interested in South Africa as a location, and particularly Cape Town. And we continue to benefit from that being one of the largest local employers out there,” Ritesh Idnani, CEO of Firstsource Solutions, said during the company’s post-earnings analyst call on 3 February. Firstsource ended last year with $944 million in revenue, up 23.3%.
Growth markets
However, the Indian IT sector is not new to focusing on growth markets. Both Tata Consultancy Services Ltd, the largest in the sector, and Infosys Ltd, the second largest, have doubled down on markets outside the US in recent years.
For two years, India was the fastest-growing market for TCS, accounting for 8.6%, or $2.6 billion, of its $30.18 billion revenue last year. Much of the company’s growth came from state-run telecom operator Bharat Sanchar Nigam Ltd, which signed a 4G network deployment contract worth $1.83 billion in August 2023.
On the other hand, Infosys focussed on inorganic growth in Australia. In August, Infosys bought a 75% stake in IT firm Versent Group for $150 million. Versent reported $137 million in revenue for FY25, which would translate to a fifth of its incremental revenue of $715 million. Infosys ended the previous fiscal with $19.28 billion in revenue, up 3.85%.
In May, Infosys acquired Australian cybersecurity firm The Missing Link for AUD 98 million ($64 million). At least one brokerage said that Australia was a growth area for Infosys.
“Infosys’s acquisitions would primarily be aimed at greater participation in growth areas,” Kotak Institutional Equities analysts Kawaljeet Saluja, Sathishkumar S, and Vamshi Krishna said in a note dated 19 August.
Wipro, the fourth-largest IT services company, was not far behind. In August, the Bengaluru-based IT outsourcer acquired Harman Digital Transformation Services, owned by Samsung Electronics, for $375 million to strengthen its engineering arm.
The Harman DTS acquisition, if successful, could add about 280 basis points, or 2.8%, to Wipro’s revenue in FY27, Abhishek Bhandari, executive director at Nomura, said in a note dated 21 August. Wipro ended last year with revenue of $10.51 billion, down 0.21%.
Infosys and Wipro earned $2.37 billion and $1.11 billion, respectively, in revenue outside the US and Europe in FY25, translating to 12.3% and 10.6% of their overall revenue.
