Synopsis
Private equity backed IT firms are growing faster than public market companies. This is due to strong cost control and operational changes. These firms show higher risk appetite and focus on leadership. They are also quicker to adapt to AI-led disruption. This efficiency leads to higher market valuations. Investors are interested in their repeatable revenue and scalability.Data from consulting firm Zinnov shows that across 70 enterprise software firms with above $1 billion in revenue currently, PE-backed platforms grew at a compounded rate of 49% during the $100 million to $500 million scaling phase. This outpaces the 40% growth in venture capital-backed firms and the 38% growth of public-market-funded peers in the same revenue bracket.
Industry watchers largely attributed the performance gap to the institutionalisation of operating discipline, beyond mere financial outperformance.
“When the investor tells them (the tech services company they own) that they are going to back them for another couple of years or so, it is very encouraging for companies to take the right bets and not have the pressure to perform every quarter. The risk appetite is higher,” said Praveen Bhadada, chief executive of consulting firm Neovay Global.
Avendus Capital’s January report on digital engineering services in January found PE-backed platforms accounted for 42% of deal volume in 2025, compared to about 20% in 2021.
“Their revenue base will be smaller, with not many companies beyond $2 billion in annual revenue, so the growth rates are faster. But if you look at a billion-dollar company in the public market vs a PE-owned one, the PE ones ability to go to a customer and say that they can disrupt their own revenue is very high,” Bhadada highlighted.
This growth has resulted in higher market valuations. In 2025, PE-backed IT assets traded at multiples between 15x and 23x EV/EBITDA, Zinnov’s data showed. This is a premium compared to the broader sector average of 16.1x, with the valuations reflecting investor interest in repeatability, margin visibility, and scalability rather than just growth narratives.
There is also a significant focus on company leadership among PE-backed companies, as part of its governance control, noted Pari Natarajan, chief executive of Zinnov.
Multiples Alternate Asset Management-backed QBurst technologies, for instance, appointed Arun Kumar Ramchandran as its CEO in April 2025, two months after buying a controlling stake in the company. Carlyle-backed Hexaware Technologies appointed Aditya Jayaraman as its India country head months after going public.
Similarly, ChrysCapital-owned Xoriant appointed ex-LTM’s Rohit Kedia as its CEO in February last year, while Nitesh Banga was appointed the chief executive of Virtusa in the same month.
“Before a PE firm buys in, the cost is completely sucked out of the company because you want to increase the weight of the multiple. Then you have a period of two years or so to invest in their five-seven investment cycle. They must extract value from the asset before they exit, which is why they come with cost and governance control,” Natarajan added.
Additionally, unlike publicly traded firms, PE-owned service providers have capital backing, enabling higher risk appetites in their operations.
“PE-backed firms tend to concentrate on what moves financial outcomes quickly. Utilisation, pricing discipline, workforce mix, vendor costs, working capital…these are levers that can be pulled with relatively predictable impact,” said Sanchit Vir Gogia, chief executive officer of Greyhound Research.
“And then comes the willingness to do what is uncomfortable. Workforce rationalisation is one example. Portfolio clean-up is another. Entire business lines can be deprioritised if they are not contributing meaningfully. These are not decisions that public companies avoid entirely, but they approach them more cautiously because of the visibility and stakeholder implications,” he added.
Experts noted that in the era of AI-led disruption impacting tech services, monolithic deals are becoming less common, with projects being broken down, modularised and restructured. “In that environment, being disciplined on cost and delivery is almost a necessity. PE-backed firms are often quicker to adapt to this reality, which reinforces the perception that they are more efficient,” Gogia said.
