India's tech mergers and acquisitions (M&A) have reached a three-year high, with deal values touching $29 billion, showcasing the resilience and attractiveness of the Indian technology sector amid global economic uncertainties. This surge is supported by strong domestic demand, balance sheet consolidation, and sustained investor confidence.

Key Drivers and Trends

Several factors are fueling this M&A boom in the Indian tech space:

• Digital Transformation: India's ongoing digital transformation and increasing demand for tech solutions are significant drivers. Government support for digitization through initiatives like "Digital India" further boosts the sector.
• Demand for Technology Expertise: Companies are acquiring other companies to gain expertise in areas like artificial intelligence (AI), data analytics, cybersecurity, and cloud computing.
• Robust Economic Growth: India is one of the world's fastest-growing major economies, with the IMF projecting a 6.4% growth in both 2025 and 2026. The tech sector is riding this wave, expecting over $300 billion in revenue by FY 2026.
• Evolving Regulatory Environment: A proactive regulatory landscape is fostering investor confidence. However, recent regulatory measures have increased scrutiny of large-value deals, particularly in the technology sector, to promote fair competition.
• Rise of AI: The growth of applied AI and generative AI is prompting increased M&A activity, with deal-making related to AI in pharmaceuticals and life sciences gaining momentum.

Sectoral Insights

The technology sector is leading the M&A landscape in India, accounting for a significant portion of all acquisitions. Within tech, certain sub-sectors are particularly active:

• Fintech: Financial Technology has led strategic M&As with a year-on-year increase in deal value.
• Healthtech: Healthtech is experiencing increased M&A activity, especially in oncology.
• AI, SaaS, and Automation: There's strong M&A and private equity (PE) interest in AI, SaaS, and enterprise automation.

Beyond technology, manufacturing, energy, and infrastructure sectors are also witnessing increased deal activity, reflecting India's policy emphasis on domestic manufacturing and energy transition.

Strategic vs. Financial Investors

Both strategic and financial investors are active in the Indian M&A market. Strategic M&A deals contributed significantly to the overall deal value, driven by digital transformation and emerging technologies like AI. Financial acquisitions have also grown substantially, reflecting the increasing interest from private equity and venture capital firms.

Noteworthy Deals and Examples

Several significant deals highlight the trends in India's tech M&A landscape:

• Accenture's acquisition of TalentSprint: This deal demonstrates the demand for skilled professionals in AI, data science, and digital transformation.
• Infosys' acquisition of Oddity: This acquisition reinforced Infosys' digital consulting and marketing services, especially in Europe.
• Wipro's acquisition of HARMAN Digital Transformation Solutions: This deal deepened engineering innovation and R&D excellence.
• TCS acquisition of Coastal Cloud: This acquisition positions TCS as a step-up in Salesforce advisory and consulting, aligned to AI-first, agent-driven transformation.
• Coforge's intent to acquire Encora: This underscores how AI-driven capabilities can be built rapidly through inorganic means.

Looking Ahead

The Indian M&A market is expected to maintain its momentum, driven by long-term growth fundamentals and an evolving regulatory environment. M&A activity in the technology sector is expected to continue growing at a fast pace in 2025. Strategic consolidation, acquisitions, and industry partnership arrangements by foreign investors will likely continue to shape the landscape. However, companies must navigate increasing regulatory scrutiny and adapt to the evolving dynamics of the digital economy.