AI drives 50% of M&A deals at India's top 26 IT firms: Crisil
Synopsis
India's top IT firms aren't just buying companies — they're buying AI relevance. Crisil Ratings found that nearly half of roughly 90 deals assessed over two fiscals were AI-driven, with over 70% of targets in the US and Europe. The telling detail: balance sheets have barely flinched, as most deals were funded through cash, not debt.
Key Takeaways
Nearly 50% of acquisitions by India's top 26 IT companies over the past two fiscals were driven by AI and allied technologies , per Crisil Ratings .
The assessment covered close to 90 M&A deals , with earlier transactions focused on digital capabilities; recent ones dominated by AI, data engineering, ER&D and enterprise platforms .
More than 70% of acquisition targets were based in the United States and Europe , offering AI talent, proprietary platforms and sector-specific IP.
Most deals were funded through internal accruals, cash reserves or share swaps , with limited debt, keeping acquirer credit profiles resilient.
Aditya Jhaver , Director at Crisil Ratings, said acquisitions can shorten capability build-out timelines 'from years to months' in a fast-moving technology cycle.
Nearly half of all acquisitions made by India's top 26 IT companies over the past two fiscals were driven by artificial intelligence and allied technologies, according to a report released on Monday, 17 August by Crisil Ratings. The findings, drawn from an assessment of close to 90 M&A deals, signal a decisive pivot in how Indian IT majors are repositioning for an AI-first demand environment.
AI Becomes the Core Acquisition Thesis
Crisil Ratings noted that AI has moved from being a peripheral consideration to the central rationale behind deal-making, as enterprise clients accelerate their shift from pilot programmes to full-scale AI deployment. Service providers are responding by using acquisitions to rapidly build out capabilities in AI, cloud, data engineering and domain-specific expertise — areas that would otherwise take years to develop organically.
Aditya Jhaver, Director at Crisil Ratings, said: 'The objective is not merely to add scale but also to enhance relevance through specialist talent, domain-ready platforms, marquee clients and sharper go-to-market capabilities.' He added that in a rapidly evolving technology cycle, acquisitions can shorten capability build-out timelines 'from years to months' and help companies stay competitive.
Shift from Digital to AI-Led Deals
Earlier transactions in the assessed pool were largely aimed at augmenting digital capabilities — cloud computing, process automation and analytics — or expanding into new geographies. Over the past two fiscals, however, deal rationales have been dominated by AI, data engineering, digital engineering, engineering research and development (ER&D) and enterprise platforms.
This shift is being accelerated by softer discretionary technology spending, pressure on traditional services revenue growth, and rising client demand for AI-led transformation. In response, IT companies are sharpening vertical expertise and acquiring differentiated platforms or specialist talent in priority markets.
Balance Sheets Remain Resilient
Notably, the inorganic push has not materially strained balance sheets. Crisil Ratings said most transactions were funded through internal accruals, cash reserves or share swaps, with limited reliance on debt. The report described these as 'capability-led, largely low-leverage deals' that should keep the credit profiles of acquirers resilient even as companies reposition for an AI-first demand cycle.
Outbound Deals Dominate, US and Europe Lead
More than 70 per cent of acquisition targets over the past two fiscals were based in the United States and Europe, making outbound deals the dominant mode. These markets offered deeper pools of AI talent, proprietary platforms and sector-specific intellectual property that Indian IT firms could not easily replicate domestically.
As AI enterprise adoption deepens globally, the pace and scale of such acquisitions are expected to remain elevated, with Indian IT firms under pressure to demonstrate differentiated AI capabilities to retain and grow large client mandates.
Point of View
Not just revenue scale. The more revealing signal is the funding discipline — cash and share swaps over debt — suggesting these firms are betting on AI without overleveraging, a lesson apparently learned from past acquisition cycles. What the report does not address is whether acquired AI capabilities are translating into measurable client outcomes or merely upgrading pitch decks. With enterprise AI adoption still maturing, the risk is that a wave of capability acquisitions produces capability overlap rather than competitive differentiation. The real verdict on this M&A cycle will come when renewal rates and AI-led deal wins are disclosed in the next two or three earnings seasons.
NationPress
17 Aug 2026
Frequently Asked Questions
What did the Crisil Ratings report on Indian IT M&A find?
The Crisil Ratings report found that nearly 50% of acquisitions by India's top 26 IT companies over the past two fiscals were driven by AI and related technologies, out of approximately 90 deals assessed. The agency said AI has become the central acquisition thesis as clients move from pilots to enterprise-scale deployment.
Which geographies did Indian IT firms target in their acquisitions?
Over 70% of acquisition targets were based in the United States and Europe, which offered deeper pools of AI talent, proprietary platforms and sector-specific intellectual property. This made outbound deals the dominant mode of M&A activity over the past two fiscals.
Have these acquisitions hurt the financial health of Indian IT companies?
According to Crisil Ratings, most transactions were funded through internal accruals, cash reserves or share swaps, with limited reliance on debt. The agency described them as 'capability-led, largely low-leverage deals' that should keep acquirer credit profiles resilient.
Why are Indian IT firms prioritising AI in their M&A strategy?
Softer discretionary technology spending, pressure on traditional services growth and rising client demand for AI-led transformation are pushing IT firms to acquire AI capabilities, specialist talent and differentiated platforms. Acquisitions can shorten capability build-out timelines from years to months, according to Crisil Ratings Director Aditya Jhaver.
How has the focus of IT sector M&A changed in recent years?
Earlier deals in the assessed pool focused on digital capabilities such as cloud computing, process automation and analytics, or on geographic expansion. Over the past two fiscals, deal rationales have shifted decisively toward AI, data engineering, digital engineering, ER&D and enterprise platforms.
