Adapting to the AI upheaval, India’s IT sector is ramping up its focus on smaller deals to maintain margins and address cautious client buying behaviours. Despite healthy deal bookings in Q1, companies and analysts acknowledged that revenue realisation remains slow.The hesitance has pushed IT companies towards short-cycle projects. This is common across large-cap and mid-sized IT companies expanding their client base in the $1-10 million as well as the $10-20 million buckets, as per financial reports.HCL Technologies added 22 customers sequentially and 91 customers year-on-year in the $1-10 million category. In the $10-20 million segment, the company added 6 customers QoQ and 11 customers YoY. Similarly, Coforge added 129 clients over the last quarter in the $1-20 million ranges. Even Tech Mahindra that reported minimal change in its client mix told businessline, “We have been pursuing deals in our focus areas and being very particular about how we execute on those deals before signing them.”This pivot towards smaller deals acts partly as a defensive portfolio response, as per Sandeep Gogia, MD, Tech & Digital, Equirus Capital.“AI is compressing the value of traditional effort-based work, while clients remain reluctant to commit immediately to large, multi-year transformation programs. IT companies are therefore pursuing more pilots, discovery engagements, implementation modules and short-cycle projects to protect growth and establish themselves within emerging AI budgets,” said Gogia.Overall, the market has evolved into a barbell-shaped structure rather than a slope, according to Greyhound Research. While shorter engagements sit at the front of the client conversations, where uncertainty is highest, larger commitments remain at the back, where integration and managed operations require scale.“A short engagement earns its place when it reduces uncertainty, proves a bounded outcome and opens a credible route to production. It becomes expensive when it is an isolated experiment with no architectural home and no accountable owner,” said Sanchit Vir Gogia, Chief Analyst and Founder, Greyhound Research.Despite the scepticism, Biswajit Maity, Senior Principal Analyst at Gartner, described the development a “strategic shift.”“Investors should view the shift to smaller, short-term projects as a positive structural change, not a weakness. When managed with outcome-based pricing and operational maturity, these smaller deals can deliver higher margins, better revenue predictability, and stronger client retention than traditional mega deals,” said Maity, arguing that companies that execute well on this model are likely to see improved returns and lower risk over time.Published on August 4, 2026