India’s technology mergers and acquisitions hit a three-year high in 2025, with total deal value expected at $26-29 billion, up 30% from $20 billion in 2024, exclusive data shared by EY showed. Deal activity has rebounded sharply from 2023, when tech M&A stood at about $5 billion, and is tending closer to post-Covid boom in 2021-22 when the total deal value reached $33 billion.
However, the current cycle is different, driven largely by vendor consolidation rather than capability acquisitions post-Covid when companies were investing in digital transformation opportunities, experts said.
This consolidation wave is marked by slowing organic growth due to AI disruption, helping companies to acquire scale at lower, more attractive valuations.
“2025 is shaping up as a reset year,” said Shivani Nagpaul, partner – TMT investment banking at EY. “Large IT services players and digital natives face significant growth pressure and must repurpose for the AI era to meet evolving demand… Vendor consolidation and attractive valuation multiples are creating a conducive environment for industry-wide consolidation.”
The trend reflects in deal size. This calendar year witnessed 15 transactions valued above $500 million, compared with just five such deals in 2024. “Strategics are driving large transactions signalling consolidation,” Nagpaul said.
Among notable deals, Capgemini acquired Indian BPO service provider WNS for $3.3 billion in one of the largest tech services deals of the year. Tata Consultancy Services ended a nearly decade-long pause on large acquisitions with the $700-million purchase of Coastal Cloud, its biggest yet. HCL Technologies made three acquisitions within the month of December. Mid-tier IT firm Coforge sealed its largest acquisition to date with the $2.35-billion purchase of Silicon Valley-based Encora.
Phil Fersht, chief executive at HfS Research, describes the trend as a shift towards services-as-software (SaS) delivery models, which means services are being delivered through software platforms, AI agents and automated workflows, rather than dependence on large human teams.
“We’re seeing other mid-tier firms like Mphasis, Persistent Systems, Virtusa, CitiusTech, Altimetrik and Ascendion approaching M&A not just to buy revenue, but to add scarce digital engineering capabilities to accelerate SaS delivery models,” Fersht wrote in a post on Saturday. “Expect more large, equity-heavy deals in 2026 as competition for engineering talent intensifies.”
Looking forward, the M&A momentum is expected to continue in 2026, driven by further IT services consolidation, innovation delivery, and growth in managed offerings.
Also, large PE investments made in 2021-22 are moving toward exits. This creates a both demand-side push and a supply-side pull.
“IT services M&A is being shaped not only by capital flows and exit cycles but also by the strategic imperatives of buyers and the transformative impact of embedded AI across major software vendors,” EY’s Nagpaul said. Software vendors like Salesforce, Microsoft, and Databricks are embedding AI into their platforms, reshaping IT services demand, she noted.
“These moves require IT services firms to deliver consulting, automation, and governance capabilities at scale. This will drive demand for capability buys,” Nagpaul said.
“The other end of the spectrum is to protect the base, i.e., ‘run the business’ type of work, where the clients are demanding significant productivity,” she added.
