IT gains a taste for M&As as tech landscape shifts

The $4.3 bn in IT acquisitions in FY26 is the highest since the turn of the century

- Jas Bardia & Varun Sood

India’s 10 largest information technology (IT) services companies have announced $4.3 billion in acquisitions in the current fiscal year, the highest since the turn of the century, as they look to acquire new competencies in artificial intelligence (AI) and cloud technologies at a time of rapid technological change.

In fiscal year 2025 (FY25), the 10 companies paid $10.8 billion (₹96,557 crore) in dividends and share buybacks and about $1.5 billion (around ₹14,000 crore) on acquisitions, Mint research found. Earlier in FY22, the same companies spent about ₹27,000 crore on buyouts and gave ₹81,669 crore to shareholders.

Significantly, some of the cash-rich, homegrown IT services firms, including Coforge Ltd and Hexaware Technologies Ltd, are now spending more on acquisitions than on returning cash to shareholders through dividends and share buybacks.

A big chunk of the FY25 acquisitions was courtesy Tata Consultancy Services Ltd, the risk-averse leader of the IT pack, which agreed to spend $773 million to buy out US-based digital marketing services firm ListEngage, and Florida-based Salesforce consulting firm Coastal Cloud. In its first analyst day in over a decade earlier month, TCS told analysts that the company "will be more acquisitive, mainly for capabilities," according to analysts at Kotak Securities. Interestingly, TCS has bought fewer than a dozen companies since going public in 2004, choosing to build technologies in-house.