The RPE Divide: Giants Build Value, Mid-Tier Builds Volume

Mid-Tier IT firms, despite strong revenue growth, haven’t seen a significant increase in revenue per employee (RPE) compared to the largers players in the industry. Mid-tier companies such as LTIMindtree and Coforge are growing revenues at 15–20% year-over-year (YoY) but have not matched this pace in RPE expansion. 

In contrast, Infosys and HCLTech have delivered among the highest RPE CAGRs in the sector, with Infosys achieving ~13% over six years. With mid-tier IT, Persistent Systems stands out, recording 58.2% growth in RPE since FY2022, the highest among peers. 

A factor to consider is that the employee growth rate in mid-tier IT firms is much greater than that of the ‘Big Five’ of India’s IT industry. But is this the only factor at play? Analysts report that strategic factors such as pricing, automation, portfolio mix and IP monetisation are equally important in shaping RPE growth.

Big IT vs Mid IT

Among the Tier-1 IT firms, RPE has grown steadily in the 20–34% range between FY22 and FY25. Infosys leads this group with a 34% jump, followed closely by TCS and HCLTech at nearly 30% each. Tech Mahindra reported 25% growth, while Wipro lagged at 20%. In absolute terms, HCLTech and Infosys now generate the highest RPE at over ₹52 lakh per employee, with TCS close behind at about ₹42 lakh.

Mid-tier IT firms present a more uneven picture. Persistent Systems is the clear outlier, with RPE soaring from ₹30.7 lakh to ₹48.6 lakh—a 58% rise that puts it nearly on par with Cognizant and within striking distance of HCLTech and Infosys. LTIMindtree also showed strong performance with 27% growth, broadly in line with Tier-1 peers.

Others, however, have lagged. Coforge, Hexaware and Cognizant managed only mid-teen growth, while Mphasis rose just 13%. Firstsource stands apart, barely moving the needle with less than 2% growth, reflecting the constraints of its BPO-heavy model.

Taken together, Tier-1 firms demonstrate consistency at scale, while mid-tier players are more polarised: a few, like Persistent, are catching up rapidly, while others trail well behind.

Big IT Breaks the Headcount-Revenue Link

Tier-1 IT firms are moving away from linear growth models that tie revenue directly to headcount. By embedding automation, IP assets and accelerators, they are scaling programmes without proportionally expanding teams, lifting RPE in the process.

Sanchit Vir Gogia, CEO at Greyhound Research, noted that this reflects a deliberate decoupling of revenue from staff count. “Infosys, TCS and HCLTech slowed hiring pyramids, redeployed AI in delivery and exited low-margin work. Infosys, for example, posted double-digit RPE growth even as its operating margin fell from 25% to ~21%. Margins are under strain, but rising RPE now acts as a strategic buffer,” he said. 

According to Gogia, mid-tier IT firms’ revenue growth is still predominantly manpower-led. Their pyramid-heavy hiring models dilute average RPE. While they excel at $1-5 million bite-sized deals that clients now prefer, such contracts typically require nearly proportional increases in staffing. 

Automation Boosts RPE

Automation has become a direct lever for RPE growth. As per Greyhound’s CIO Pulse 2025 report, a European bank—a client of Infosys—embedded AI in its trade finance operations, lifting contract value by 22% YoY while reducing staffing needs. The deal boosted RPE but required onshore compliance-heavy delivery, which dampened margins. The bank’s CIO admitted the paradox: “We’re paying more per solution, but the vendor’s per-head profitability is shrinking.”

Mid-tier firms are also adopting AI, but without comparable scale. “Outcome-based AI projects are emerging, but mid-tier players often absorb upfront costs, keeping RPE low. “Without scale investments in automation platforms, their revenue per employee remains structurally capped,” Gogia said. 

Mid IT Lacks IP Monetisation

Tier-1 firms are leveraging proprietary IP and platforms to drive both productivity and higher billing rates per employee. This gives them an edge in sustaining RPE growth.

Mid-tier players, however, continue to struggle with IP monetisation. According to Greyhound, a Japanese automotive client praised a mid-tier vendor’s AI-enhanced outcomes but admitted the vendor had to discount due to a lack of proprietary IP. “The value-add was capped by the model,” the CIO said.

IP-based offerings carry higher margins because they are reusable, licensed and often outcome-linked. Owning even small IP lets mid-tier IT protect margins in a market where pricing power is otherwise eroding. This creates repeatable revenue stream without having to grow proportional headcount.

Similarly, Kishor Patil, CEO at KPIT Technologies, acknowledged productivity gains from AI but noted they are not backfilling attrition, leading to “softness on the employee side” and limited RPE growth.

Clients Want Big IT for RPE Gains

Client preferences are shifting in line with RPE performance. Greyhound CIO Pulse 2025 shows global buyers gravitating to Tier-1 firms for multi-year transformation contracts, especially in AI-enabled operations and engineering. 

CIOs consistently report that these firms bring greater automation and reusable platforms to engagements, allowing projects to scale faster without proportional increases in staffing. While buyers acknowledge that vendor margins are under pressure, their experience is that Tier-1 firms deliver greater per-person value on engagements compared with mid-tier firms.

Mid-tier firms, in contrast, remain boxed into staff augmentation roles, essentially supplementing the existing workforce. About 58% of CIOs surveyed still see them that way, and only 12% said they received proprietary IP or accelerators.

Clients acknowledge their agility and responsiveness, but do not perceive the same per-employee value uplift delivered by Tier-1 providers. This reinforces the perception that mid-tier growth remains linear and manpower-driven—a key reason why clients do not see the same per-employee value uplift they experience with larger providers.

RPE as the Market Divider

The industry now reflects two distinct growth models. Tier-1 firms are driving higher revenue per employee through automation, platforms and IP, using RPE to cushion margin pressure. Mid-tier players remain reliant on headcount-led growth, limiting per-person productivity. For clients, the split is clear: Tier-1 firms deliver stronger RPE gains, while mid-tiers offer agility but less value per worker.

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