Fast-growing mid-tiers offer focused execution in uncertain markets

In Q1 2025, HFS Research identified the ‘fastest five’ service providers—Coforge, Firstsource, Persistent, Sonata Software, and EXL—achieving the highest year-over-year (YoY) revenue growth⁽¹⁾ of the providers we track. Each service provider surpassed the market average growth rate of 5.8% YoY ⁽²⁾ to report double-digit growth (see Exhibit 1). Interestingly, it’s the same roster of providers we covered in the previous 2 quarters, highlighting continued success for some, and the impact of inorganic growth for others.

These emerging leaders typically represent a differentiated value proposition for enterprises seeking alternatives to traditional TWILTCH (TCS, Wipro, Infosys, LTIMindtree, Tech Mahindra, Cognizant, and HCL) firms, combining operational agility with scalable delivery capabilities. Notably, strategic inorganic growth initiatives have also significantly accelerated their market and positioning and given them a deeper specialty in specific sectors.

Exhibit 1: Year-over-year ‘fastest five’ revenue growth in Q1 2025

Note: Revenue and growth data represent HFS estimates based on analysis of publicly available information. Year-on-year (YoY) growth compares one quarter with the corresponding quarter of the previous year.
Source: HFS Research and earnings reports of leading service providers, 2025

Mid-tier IT services firms focus on verticalized AI, but geopolitical and macroeconomic caution loom large

The fastest five service providers share common traits: AI-first, domain-deep, and US-centric. Their proprietary AI platforms drive deal traction, and earnings reports reveal success in BFSI and healthcare. Meanwhile, the US continues to drive growth, while Europe’s decision-making has slowed. However, tariffs and global uncertainty could change this—we’ve already seen tariffs and trade uncertainties affect retail, manufacturing, and tech—large deals continue, but with longer sales cycles. Mid-market players are typically much more vulnerable to such changes, so seeing how this report plays out in the coming quarters will be interesting.

Delving into the earnings of each ‘fastest five’ company

• Coforge reported a 43% YoY growth in Q1 FY25, marking its third quarter of exceptional performance. The firm’s strategy of combining large-deal velocity (e.g., the $1.56 billion Sabre 13-year contract) with digital engineering depth and GenAI-led innovation is paying off. Inorganic growth through Cigniti, TMLabs, Rythmos, and Xceltrait acquisitions has boosted its capabilities in AI, QE, cloud, and ServiceNow. It also enables Coforge to expand beyond its core industries—BFS, insurance, and transport—into healthcare, retail, and global public sector markets, but might bring with it integration challenges. Additionally, the divestiture of the loss-making AdvantageGo business and rapid revenue offset (~$8M this quarter) underscores focused execution.
• Firstsource reported a 24.4% YoY growth in Q1 FY25, driven by strong US performance across Healthcare, CMT, and Diversified industries. It was supported by multiple large deals exceeding $5 million in ACV, strategic leadership additions, and expanded AI-led capabilities. However, near-term risks from cost pressures, onshore-to-offshore execution in CMT, and softness in UK demand will require disciplined margin management and targeted client expansion to sustain momentum.
• Persistent reported a 20.7% YoY growth in Q1 2025, anchored in BFSI and healthcare, powered by a deliberate shift to AI platforms and deep ecosystem partnerships, alongside its focus on expanding key client relationships. Persistent’s consistent growth over 20 quarters focuses on expanding key client relationships and investment in proprietary AI platforms. However, cautious client sentiment and exposure to discretionary budgets in healthcare and tech warrant close monitoring.
• Sonata Software reported 19.4% YoY revenue growth in Q1 2025, driven by strong momentum in its BFSI and healthcare and life sciences businesses, which now contribute to 35% of its international revenue; an increase from the 13% three years earlier. The company reported securing 11 large deals during the year, including a $73M+ platform modernization win in TMT and a data transformation engagement in BFSI with increased focus on AI-led modernization, a $34M AI pipeline, and deepening Microsoft partnerships (notably around Fabric).
• EXL reported a 14.8% YoY revenue growth in Q1 2025. This increase was driven by strong performance across its core verticals: insurance (8.7% YoY), healthcare and life sciences (24.8% YoY), and banking and capital markets (14.3% YoY). North America remained the dominant market, contributing to 82.9% of revenue.

The Bottom Line: Enterprises need partners with long-term vision and execution muscle; mid-tier players often deliver sharper focus, faster outcomes, and greater alignment than legacy giants.

In today’s uncertain environment, procurement, CIO, and transformation leaders must look past brand recognition and marketing narratives. A deep evaluation of execution strength, industry relevance, and cultural alignment is essential. Fast-growing mid-tier firms often bring sharper focus, greater agility, and a more collaborative approach. These traits are increasingly valued by enterprises navigating rapid change, and this is where the ‘fastest five’ stand out.

(1) Growth data represents HFS estimates based on analysis of publicly available information. The year-on-year (YoY) growth compares a quarter with the corresponding quarter of the previous year.
(2) HFS considered Accenture, Birlasoft, Capgemini, Coforge, Cognizant, Conduent, DXC, EPAM, EXL, Firstsource, Genpact, Globant, HCLTech, IBM, Infosys, Kyndryl, LTIMindtree, Mphasis, Persistent, Sonata Software, TCS, Tech Mahindra, Wipro, WNS, and Zensar for this analysis.
(3) HFS definition of mid-tier companies: revenue between USD 500 million and USD 2 billion.