Indian IT pivots to bigger M&A bets to turbocharge AI-led growth

Indian IT services companies are leaning on bigger, capability-centric acquisitions as the mergers and acquisitions cycle rebounded in 2025, with firms using deals to reposition for growth and sharpen their next‑gen technology portfolios amid slowing traditional outsourcing and rising demand for AI‑driven transformation. According to UnearthInsight, Indian IT M&A touched around $5 billion across 21 transactions last year, with Tier‑1 players contributing about $2.32 billion, primarily in cloud and data (27 per cent), AI and analytics (18 per cent) and enterprise platforms (9 per cent).

Tier‑2 firms marginally surpassed the large caps with $2.43 billion in deals, heavily skewed towards AI and analytics and enterprise platforms at 40 per cent each, underscoring their push into higher‑value, software‑ and platform‑led revenue streams. Tier‑3 companies remained bit players at $0.31 billion, but focused their bets on domain‑led engineering, which accounted for roughly 80 per cent of their deal value, as they chased specialised IP and niche industry depth rather than scale. Analysts say this phase of M&A is less about adding headcount and more about buying differentiated cloud, digital engineering and AI assets that can command premium pricing and lock in long‑term, high‑margin transformation work.

CT Bureau