Revenue growth at mid-tier IT services firms such as Hexaware, Zensar, Mphasis and L&T Infotech is set to pick up, boosted by strong deal wins as they see customers keen to invest more in technology projects. While they are projected to outpace large rivals such as Infosys and Wipro in growth, the pressure on their margins is likely to be higher. Which of the following can be logically inferred from the above information?

Options

A. All indicators show that these mid-tier IT service firms will again grow better than industry average in FY2020. Their pipeline is better than last year. They are growing both existing accounts and getting new logos and deals especially in the last quarter.
B. It is broad-based growth, across geographies, verticals and service lines, unlike their large peers where we see softness in a few geographies and verticals.
C. Mid-tier companies are sharpening their overall strategy, by increasing focus on certain markets and businesses than spread thin.
D. While these firms are growing fast, their margins continue to be under pressure. The pricing pressure in the traditional segment can erode their margins further.

Answer

C

Explanation

The correct answer is option 3, i.e. Mid- tier companies are sharpening their overall strategy, by increasing focus on certain markets and businesses than spread thin.
‘Inference’ is a conclusion reached on the basis of evidence and reasoning. We first make sure to read the statement carefully and then see what immediate inferences can be drawn based on our first reading. The next step is to look at the statements given in the options, analyze them and see if they seem relevant with respect to the information/data provided to us.
From the statement, we can infer that mid-tier IT companies are growing in terms of revenue with the advent of technology projects. Though, they are expected to outcast giants like Infosys and Wipro, the pressure on their margins is likely to increase.
(1) can be rejected as the ‘indicators’ mentioned in the beginning of the sentence are not mentioned anywhere in the given context. Also no information is evident regarding new logos.
(2) can also be rejected as no information is evident on the basis of the given context regarding expansion across geographies, verticals and service lines.
(4) can be eliminated as it just a rephrase of the information already provided in the given statement. From the given assumptions (3) is the most appropriate deduction that can be made.
(3) can be logically inferred on the basis of the fact that these companies are improving their strategy (which has impacted their revenue growth) by targeting certain markets and businesses (new technology projects).
As all the other options except (3) are irrelevant with respect to the data provided in the statement. Thus, the correct answer is option 3.