Indian IT Closes FY26 With a $4 Bn Bet on Vertical Depth, AI Over Scale

In a fiscal year marked by cautious enterprise spending and AI-led disruption, Indian IT services firms have been recalibrating their growth playbooks.

Between April 2025 and March 2026, the industry clocked at least 13 significant acquisitions with a disclosed value of at least $4 billion. Counting smaller deals, IT M&A activity in FY26 rose to over $5 billion across 21 deals, according to UnearthInsight.

The nature of these deals also marks a departure from the past. 

Rather than pursuing large, transformational acquisitions, companies are increasingly targeting specialised firms to plug domain gaps, deepen vertical expertise, and add near-term revenue streams. These acquisitions span high-demand areas such as healthcare IT, cloud, customer experience, telecom software, and financial platforms—segments where clients are seeking both industry context and AI-enabled solutions.

Infosys emerged as the most active acquirer, closing five deals: MRE Consulting ($36 million), The Missing Link (~$63–65 million), Versent Group (~$153 million), Stratus (up to $95 million), and its largest transaction, Optimum Healthcare IT (up to $465 million). This reflects Infosys’ clear push into healthcare IT and cloud-led transformation, alongside strengthening cybersecurity and digital capabilities.

Tata Consultancy Services (TCS) followed with two acquisitions—ListEngage ($72.8 million) and Coastal Cloud ($700 million)—to bolster its SaaS and customer experience offerings.

Wipro made a single but significant acquisition, buying Capco’s Harman DTS unit for $375 million to expand its consulting and digital transformation capabilities.

HCLTech, in contrast, pursued a cluster of smaller, capability-led deals, including HPE’s telecom business ($160 million), along with JasperSoft, Wobby (~$5.2 million), and Finergic, with some deal values undisclosed.

Meanwhile, mid-tier player Coforge stood out with the largest deal of the period, acquiring Encora for $2.35 billion—a move that signals an ambition to scale both capabilities and global delivery footprint.

Taken together, the deals point to a clear trend: Indian IT firms are prioritising depth over breadth, even as select players continue to pursue scale.

Targeting Vertical Solutions

According to a note from strategy consulting firm Zinnov, M&A activity in the technology services sector is increasingly being driven by vertical specialisation, with BFSI, healthcare, automotive, and semiconductors emerging as key hotspots. Companies are targeting capabilities in areas such as AI-led financial analytics, digital health platforms, EV and autonomous systems, and advanced chip design, reflecting a broader shift toward industry-specific expertise.

“Infosys' $560 million bet on Optimum Healthcare IT and Stratus is a strong signal that the industry is finally taking vertical solutions seriously,” Praveen Bhadada, CEO and Managing Director at consulting firm Neovay Global, tells AIM.

“Domain-specific capabilities are one of the biggest value pools in technology services today, and firms that don’t build or buy them risk commoditisation,” he adds.

The economics of these transactions also point to a narrowing window of opportunity. “At roughly 1.5x to 2x revenue, these are attractive multiples, but that window will not stay open for long,” Bhadada notes, warning that rising demand for proprietary data and AI-led platforms could push valuations higher.

Analysts echo this view. According to JM Financial, Infosys’ recent acquisitions—Optimum Healthcare IT and Stratus—could together add about 1.6% to its annual revenue run rate post-closure. More importantly, they align with a broader industry trend where M&A is being used to address portfolio gaps amid a slowing macro environment.

A Speedy Structural Shift

A structural shift is also underway. 

For years, Indian IT firms relied on organic growth driven by large outsourcing contracts and scale efficiencies. However, AI is reshaping client expectations. Enterprises now demand not just engineering talent, but contextual intelligence—industry-specific data, workflows, and platforms that can power real-world AI deployments.

This is where targeted acquisitions are becoming critical.

“Tier-1 firms, including TCS and Wipro, have been gradually warming up to inorganic growth, and Infosys deserves credit for moving with conviction,” Bhadada says. “But mid-tier players cannot afford to stay on the sidelines—targeted M&A is increasingly the fastest path to building vertical depth at speed.”

So far, Coforge appears to be the only mid-tier firm matching that urgency at scale, even as the broader industry accelerates its shift toward specialised, capability-led growth.

In an earlier statement on the 2026 outlook, Michelle Ritchie, Global Industrials and Services Deals Leader, PwC US, said that this year, global M&A in industrials and services is about adoption, not scale. 

“Geopolitical friction, labour scarcity, and supply chain shocks are driving companies to acquire certainty through automation and digitalisation, while private equity consolidates fragmented markets into platforms,” she noted, adding that enterprises are divesting legacy or non-core operations and reallocating capital towards higher-growth, technology-enabled, and service-oriented businesses, aligned with digitisation and build-out of AI infrastructure.

The next phase of Indian IT’s evolution may hinge less on who scales fastest, and more on who acquires the right capabilities before valuations—and the opportunity window—tighten further.