Navigating Growth Bottlenecks in India’s IT Sector: Strategies for Mid-Size Tech Companies

India’s Information Technology (IT) sector contributes 7.5% to the nation’s GDP and is projected to reach $300 billion by FY26. It stands as a global leader in innovation, exports, and digital services.

Mid-size tech companies—typically with 100 to 1,000 employees—play a vital role in this ecosystem. They drive job creation, product innovation, and digital transformation across IT services, SaaS, cybersecurity, analytics, cloud platforms, and B2B solutions.

These firms often operate in the scale-up phase, navigating the path from startup to mid-stage scale-up, then to enterprise and global expansion. However, at the mid-size stage, growth bottlenecks become pronounced. Limited resources and rising operational complexity create challenges that differ from those faced by startups or large enterprises.

Despite these challenges, ecosystem enablers offer strong support. These include rising digital demand from BFSI, healthcare, and manufacturing sectors, India’s Digital Public Infrastructure (DPI) creating B2G opportunities, and increased startup exits and private equity reinvestment loops.

Yet, without the right strategies, growth bottlenecks can stall momentum. This article explores these challenges in depth and presents a hybrid consulting framework to help senior leaders address scaling issues and unlock sustainable growth.

Recent Developments Shaping Mid-Size Tech (June 2025)

As of mid-2025, India’s IT sector is experiencing transformative trends that impact mid-size tech firms:

• Rebound in Enterprise Tech Spend: A 6–8% increase in global enterprise tech spending in Q2 2025 signals renewed demand for Indian IT solutions.
• GenAI and Cloud-Native Adoption: Mid-size firms are launching Generative AI (GenAI) modules and cloud-native products to meet client needs for advanced technology.
• NASSCOM’s Scale-Up Programs: NASSCOM’s 2025 initiatives support SaaS, infrastructure, and analytics firms with mentorship, funding access, and market expansion.
• Relaxed SEBI IPO Norms: Simplified IPO regulations are enabling mid-size B2B product firms to access capital, addressing funding-related growth bottlenecks.
• Tier-2 City Emergence: Cities like Pune, Coimbatore, and Kochi are becoming delivery hubs, driven by talent cost recalibration and infrastructure growth.
• DPDP Act Compliance Deadlines: The Digital Personal Data Protection (DPDP) Act’s requirements are slowing go-to-market pace and complicating client onboarding, creating new growth barriers.

1. Key Growth Bottlenecks for Mid-Size Tech Firms

Mid-size tech companies face significant growth bottlenecks that hinder their ability to scale effectively:

• Scaling Issues: Operational silos, inefficient delivery models, and underdeveloped middle management create scaling issues, leading to delays and cost overruns.
• Talent Retention: High attrition of architects and domain leaders to BigTech and multinational corporations (MNCs) disrupts innovation and delivery, posing a major growth barrier.
• Sales Dependency: Over-reliance on founder-driven sales, rather than institutionalised Go-ToВП To-Market (GTM) engines, limits scalability and creates a critical growth bottleneck.
• Funding Gaps: Limited access to Series B/C capital, high customer acquisition costs (CAC), and weak financial modeling restrict growth, exacerbating growth barriers.
• Tech Debt: Monolithic architectures and delayed transitions to cloud or API-first designs reduce agility, contributing to operational challenges.
• Compliance Drag: Legal, intellectual property (IP), and data protection overheads for cross-border clients, including DPDP and GDPR compliance, strain resources and slow expansion.

2. Strategic Solutions Using a Hybrid Consulting Lens

To overcome these growth bottlenecks, mid-size tech leaders must adopt a hybrid consulting approach integrating management, finance, legal, and technology expertise. Below are actionable strategies:

• Growth Strategy Optimisation

1. Segment-Wise Playbooks: Develop Customised strategies for enterprise BFSI, SME HealthTech, and Global Capability Centers (GCCs) to address unique client needs and mitigate scaling issues.
2. Rebalance Client Portfolio: Prioritise high-Lifetime Value (LTV) accounts and exit low-margin deals to optimise revenue.
3. Create Solution Accelerators: Build domain-specific templates or AI copilots for faster deployment, reducing operational challenges.
4. Form Joint Ventures: Partner with infrastructure/cloud providers for co-delivery in US/EU markets to enhance global reach.
5. Launch Digital Marketing Engines: Adopt Product-Led Growth (PLG) tactics and Account-Based Marketing (ABM) to drive scalable lead generation and overcome sales-related growth bottlenecks.

• Go-To-Market (GTM) Strategy

1. Build Internal Sales Academies: Train sales teams to reduce founder dependency and scale GTM efforts.
2. Enable Channel Partnerships: Forge partnerships in APAC/EMEA to expand market presence and address growth barriers.
3. Target Midsize Client Clusters: Focus on underserved midsize clients neglected by Tier-1 players to capture niche markets.
4. Leverage India’s DPI: Integrate with India’s digital stack (e.g., UPI, ONDC) for platform-based exports, creating unique value propositions.

• Operational Strategy

1. Shift to Recurring Revenue Models: Transition from project-based to subscription-based models for predictable cash flows, addressing scaling issues.
2. Implement AIOps and Agile Pods: Use AI-driven operations, Agile pods, and DevSecOps automation to streamline delivery and reduce operational challenges.
3. Integrate Real-Time Dashboards: Track unit economics (CAC, LTV, churn) in real-time to optimize resource allocation.

• Legal, Compliance, and Risk Strategy

1. Adopt Scalable IP Frameworks: Protect proprietary technology to maintain competitive advantage and reduce legal growth barriers.
2. Align DPDP and GDPR Workflows: Embed compliance early in product roadmaps to streamline client onboarding.
3. Structure Cross-Border Contracts: Design contracts to protect margins and ensure compliance with global regulations.

3. Talent and Organisational Strategy

• Hire Industry-Experienced Delivery Managers: Recruit leaders with BFSI, healthcare, or manufacturing expertise to strengthen delivery.
• Develop Internal L&D Programs: Upskill teams in GenAI, FinOps, and cloud-native design to address talent gaps and growth bottlenecks.
• Use ESOPs and Deferred Bonuses: Retain critical roles with long-term incentives to combat attrition.

Illustrative Case Studies

• Growth Pivot via GTM Overhaul

A mid-size Indian SaaS firm in logistics faced growth bottlenecks due to high CAC and limited market reach. The firm outsourced inbound marketing and automated demos using AI chatbots. It also entered the Latin American market through a cloud reseller partnership. As a result, it achieved a 3x increase in Monthly Recurring Revenue (MRR) within 12 months.. This GTM overhaul directly addressed sales-related growth bottlenecks, enabling scalable expansion.

• Operational Shift to Recurring Revenue

An analytics services company struggled with operational challenges in its project-based model. By shifting to productized insights and offering subscription-based dashboards for retail clients, it boosted gross margins by 11% and reduced delivery cycles by 30%. This transition mitigated scaling issues and ensured sustainable revenue growth.

Conclusion

Mid-size tech companies are vital to India’s IT sector, driving innovation, exports, and economic growth. However, growth bottlenecks—including scaling issues, talent attrition, sales dependency, funding gaps, tech debt, and compliance drag—threaten their progress. By adopting a hybrid consulting approach, mid-size tech firms can overcome key growth barriers. This approach focuses on optimising growth strategies, building strong GTM engines, streamlining operations, ensuring compliance, and investing in talent. The case studies show that with the right strategic pivots, companies can unlock significant value. These actions position mid-size tech firms to become global leaders in India’s evolving IT sector.

About LawCrust

LawCrust Global Consulting Ltd. delivers cutting-edge Hybrid Consulting Solutions in Management, Finance, Technology, and Legal Consulting to ambitious businesses worldwide. Recognised for our cross-functional expertise and hybrid consulting approach, we empower startups, SMEs, and enterprises to scale efficiently, innovate boldly, and navigate complexity with confidence. Our services span key areas such as Investment Banking, Fundraising, Mergers & Acquisitions, Private Placement, and Debt Restructuring & Transformation, positioning us as a strategic partner for growth and resilience. With an integrated consulting model, fixed-cost engagements, and a virtual delivery framework, we make business transformation accessible, agile, and impactful.

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