When Indian IT services company Coforge acquired Hyderabad-based quality engineering and software testing firm Cigniti Technologies in 2024 for $220 million, the trouble began almost immediately.
Coforge employees found themselves at odds with incoming teams. Mid- and senior-level leaders clashed over client ownership and portfolio control. Even basic organisational clarity was missing.
“Plus, nobody had an idea about the ‘org restructure’ processes,” a former Coforge employee who was part of the organisation during the acquisition, tells AIM, requesting anonymity. “In some cases, business vertical heads did not know the members of their teams.”
There were several exits, including senior employees, within months of the acquisition amid confusion and internal friction.
Such culture clashes are poised to become commonplace as Indian IT companies accelerate acquisitions, often to build AI-led capabilities, access new clients, and tap new revenues.
In FY26, Indian IT clocked 13 major acquisitions, including Coforge’s acquisition of software development services firm Encora for a whopping $2.35 billion. These companies are increasingly targeting specialised firms to plug domain gaps, deepen vertical expertise, and add near-term revenue streams.
A greater number of acquisitions are going through than ever before. According to research by Harding and Bain & Company last year, 70% of mergers now succeed, and even those that don’t still create some value.
However, the real bottlenecks are not at the deal table, but after the deal is done.
Tripping Over Integration, Not Acquisition
Praveen Bhadada, CEO and Managing Director at consulting firm Neovay Global, says the industry’s biggest weakness lies in post-merger integration, not deal-making.
“You’ve acquired a company, but how do you integrate the companies together? That’s where I think the industry at large has done a very poor job,” he remarks.
Bhadada breaks down M&A into three stages: discovery, diligence, and integration. He argues that companies struggle across all three processes, but most visibly in the last phase.
“Integration is not just about people… it’s about integration of sales, delivery, capability, client relationships,” he notes, pointing to the multi-dimensional complexity that companies often underestimate.
Cracks tend to appear even before integration. Acquirers frequently overlook red flags during diligence due to pressure to close deals.
“People tend to overlook some of the gaps… because there’s a bigger need to acquire—maybe for revenue or capability,” he shares.
The consequences show up later. Based on his observations, “75% or more of the acquisitions do not hit the metrics that were signed upon during the time of the transaction”.
Day 1 Confusion, Day 100 Friction
The problems start early—sometimes on the very first day.
Bhadada points to poor communication with customers. “In many cases, we have seen customers get to know about the acquisitions through the media itself,” he says.
Internally, ambiguity over reporting structures creates friction. “Organisation charts in the first few days… are very unclear… that starts creating a lot of friction and confusion.”
Even basic operational integration—such as IT systems and email access—can take weeks or months, slowing collaboration.
An M&A consultant with Deloitte, who has worked on multiple integration projects, outlines how these challenges evolve over time.
On Day One, HR consolidation and email migration may go smoothly “with proper process”, but workforce restructuring begins almost immediately, including rebadging and layoffs.
However, by Day 100, deeper issues emerge. “Technology consolidation—customer faces major issues as support methods change, sales partner change… discount levels change,” the consultant tells AIM on the condition of anonymity.
Within the first year, poorly executed integrations can lead to voluntary attrition and customer churn. “Customer trust usually takes a hit,” the person adds, noting that some clients begin exploring alternatives.
The Hard Problem of Culture
Culture seems to be a core issue.
“There are cultural differences… decision-making, initially struggles,” the consultant notes, adding that while leadership alignment may appear strong externally, “the hands-on employee faces the most burn.”
For Jagdish Mitra, Founder and CEO of IT services company HumanizeTech.ai, people—not technology—are the biggest challenge. He attributes many failed integrations to misalignment between organisations.
“Most times, it does not succeed because the companies… have very little alignment with your strategy… your people's culture,” he observes. “Therefore, it fails in terms of leadership conflicts, and no one is really buying it.”
Striking the right balance is difficult. Companies either over-accommodate incoming teams or marginalise them entirely.
“There is no playbook to make sure that this will succeed,” Mitra adds, however, noting that companies can learn from past successes and failures.
Capability Failures and Leadership Churn
Another structural issue is the failure to integrate newly acquired capabilities into the core business. Bhadada notes that unless sales teams are trained and incentivised to sell new offerings, they simply revert to familiar services.
“Typical human behaviour will take over… ‘we don’t understand these guys… therefore we will not take that as a proposition’,” he says.
This undermines the rationale for acquisition. “You acquired the capability… you have not been able to integrate capability… it defeats the purpose,” he laments.
Leadership attrition further weakens integration.
“In the first three to six months… 30–40% of the leadership teams are gone,” Bhadada remarks. Many exit due to cultural misfit or lack of clarity on roles. This erosion of leadership often leads to missed financial and strategic goals.
Failure, Mitra argues, is not just about missing revenue targets.
“It’s an erosion of value creation that you had started off with the client,” he notes. “You are letting a market opportunity go.”
Consultants Can Diagnose, Not Deliver
While consulting firms play a significant role in deal-making, their involvement drops sharply after the acquisition.
Bhadada estimates that while up to 80% of deals involve consultants during discovery and diligence, only about 20% engage them for post-merger integration. “That’s the biggest mistake they make,” he remarks.
Mitra offers a similar view: “A consultant can only show you a mirror… can’t do the job for you.”
Ultimately, the onus lies with company leadership to execute integration effectively.
Despite a surge in acquisitions—driven by AI, capability gaps, and market expansion—Indian IT services firms are still evolving their integration playbooks. Unlike Western markets, where post-merger integration teams are often set up months in advance, Bhadada says, “in our industry here, it’s a little bit of an afterthought".
The result is a familiar pattern: strategic intent at the top, operational friction on the ground.
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