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Indian IT Services M&A Landscape in 2024: Key Trends and Strategic Insights
Indian IT Services M&A Landscape in 2024: Key Trends and Strategic Insights

February 24, 2025

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The Indian IT services sector continues to be a dominant force in the country’s M&A landscape. In 2024, despite global uncertainties, the sector saw strong deal activity, driven by digital transformation, cloud adoption, and AI-focused investments. This blog provides a deep dive into the key trends, sectoral movements, and strategic imperatives that shaped the IT services M&A ecosystem in 2024.

 

1. IT Services Dominate India’s M&A Market

In CY24, IT services accounted for 34% of the overall India M&A volumes, highlighting the sector’s critical role in deal-making.

M&A deals in IT services were classified into two categories:

Strategic M&As: Aimed at long-term goals like market expansion, synergies, and diversification.

Private Equity (PE) M&As: Driven by investment firms looking to enhance financial performance.

Strategic M&As contributed 59% of the total deal value ($35 Bn), fueled by investments in cloud computing, AI, and digital transformation.

 

A graph of value and price

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Source: Nasscom, TechCircle, VCCEdge

2. Resurgence in High-Value Transactions

  • Despite macroeconomic headwinds, M&A deal value in the IT services sector increased by 6.3% y-o-y, reaching $9.9 Bn in CY24, up from $9.3 Bn in CY23.
  • The growth was driven by a resurgence in high-value transactions, despite a 13% decline in overall deal volume due to global economic uncertainties.
  • The second half of 2024 (H2CY24) saw deal volumes rebound by 16.4%, indicating renewed investor confidence.

3. Strategic M&As on the Rise

  • Within IT services, strategic M&A deal value surged by 25%, reaching $4.3 Bn in CY24, compared to $3.4 Bn in CY23.
  • Domestic strategic M&As (where both the acquirer and acquiree are Indian) grew 2.4x in value, reflecting positive economic conditions and increased local investments.
  • Mega deals (above $100 million) accounted for 20% of domestic M&As, mainly driven by expansion into new geographies and verticals.

4. FinTech Leads Sector-Wise M&A Activity

  • FinTech maintained its leadership position in strategic M&As, witnessing an 8x increase in deal value y-o-y, fueled by:
  • Rapid digital transformation in financial services.
  • The rising demand for tech-driven solutions in banking, insurance, and payments.

 - Travel & Mobility Tech ranked second, with $557 Mn in deal value, marking a significant shift toward larger deals in the sector.

5. Key Strategic Imperatives Driving IT Services M&As

In 2024, IT services companies prioritized three main strategic goals for their M&A activities:

Access to Intellectual Property (IP) and Existing Platforms: Companies focused on acquiring proprietary platforms and digital assets to strengthen their market position.

Scale and Market Expansion: M&A deals were used as a vehicle to expand into new markets and increase operational capabilities.

Geographic Expansion: Many companies invested in global acquisitions to enhance their presence in emerging and developed markets.

Technology-Focused Acquisitions

  • 28% of strategic M&A deals focused on Digital Experience (DX) and Digital Product Engineering, indicating a shift toward customer-centric and market-ready digital platforms.
  • Cloud and AI-related M&A deals comprised 20% of the sector’s strategic transactions, reinforcing the industry’s commitment to digital transformation.
  • IT consulting acquisitions accounted for 10%, reflecting the growing demand for advisory and implementation services in navigating technology transitions.

 

6. PE M&A Deals Face Challenges

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Source: Nasscom, TechCircle, VCCEdge

 

While strategic M&A deal value increased, PE-driven M&A activity declined in 2024:

PE deal value dropped by 5%, from $5.8 Bn to $5.5 Bn, due to:

  • Higher capital costs and tighter investment conditions.
  • Cautious investor sentiment, leading to a decline in large-scale transactions.
  • PE deal volumes declined by 17%, but smaller deals (sub-$25 million) continued, focusing on niche technology acquisitions and capability building.
  • Sector-wise, FinTech, EdTech, and Media & Entertainment led PE deals, contributing 34% of the total deal volume.

Growth in Travel & Mobility Tech Deals

  • One standout sector was Travel & Mobility Tech, which bucked the declining trend in PE deals:
  • The sector grew 1.6x in deal volume and 2x in value, driven by investment in digital-first travel solutions and smart mobility platforms.

 

For more insights, please read our complete report 2024 India IT Services M&A Deals Tracker.

Report link: https://tinyurl.com/mrynjkfp

 

 


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Prajwal Pandey
Research Analyst

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