Slowingdemand environment always leads to changes in the ways a sector operates. And Indian IT services industry is no exception. For the last 3 years, most large firms have clocked low single digit revenue growth rate. Similarly, growth rates of mid-tier IT companies have come down to high single digits from mid-teens recorded during the post-pandemic period. Increasing adoption of artificial intelligence (AI) and an uncertain global business environment can be cited as the reasons behind such slowing demand.

As expected, such changes in the market place have led to a churn. Interestingly, this churn is more evident in case of mid-tier IT services companies. In the current financial year, there were several changes seen in the mid-tier IT space. For instance, veteran banker & former SBI chairman, OP Bhatt had resigned from the chairman post of mid-tier IT services company, Coforge. Reports suggested that friction between the board members was the reason for such exit. After Bhatt’s resignation, another director- DK Singh also exited the board. After PE fund house- Advent’s entry into the board post Coforge’sEncoraacquisition; differences cropped up, leading to eventual exit of Bhatt. This week, Akhil Kumar Gupta has been appointed as the chairman of Coforge. Similarly, another mid-tier IT firm- Hexaware has seen top level changes. This month, Hexaware announced the appointment of Vivek Jetley as CEO Designate, who will take over from October 28, 2026. The incumbent, SrikrishnaRamakarthikeyanwill step down from the CEO role after a 12-year stint at the company, it has informed.

Similarly, Bengaluru-headquartered Mphasis has roped in Girish Paranjpeas its new Chairperson. Paranjpe has been a veteran technocrat with several decades of experience in IT outsourcing market and had led Wipro as joint CEO earlier. Another mid-tier ER&D firm, Cyient has made several kye leadership changes this year. While these changes look like regular leadership churn on the surface, a deep dive provides more strategic reasons. With rapid adoption of AI, both IT services & ER&D firms are facing a budget squeeze at the client’s end. A part of the technology budget is being diverted to AI tokens. Moreover, clients are asking for passing on the cost savings to them, which are arising out of AI. All these factors are resulting in slowdown in revenue growth rate coupled with margin pressure.

Mid-tier firms are trying to navigate such dynamics through bringing in leaders, who will help them win more AI projects, increase their market share and guide them in developing proprietary AI tools. To achieve this objective, old leaders are replaced with new ones, who have the ability to drive growth in such uncertain environment. In addition, the growth approach is also changing. Most companies are shunning the ‘business as usual’ approach and try to be early adopter of the AI wave. That is the reason the market has seen big-ticket acquisitions being done by several mid-tier IT companies in FY27 so far. In a way, these changes can be termed ‘good’ because old ways may not be sufficient for solving new problems in the market place.