AI drives nearly half of Indian IT M&A deals, says Crisil

Nearly half of all mergers and acquisitions by leading Indian IT companies in the past two financial years were aimed at acquiring artificial intelligence and allied capabilities, according to Crisil Ratings. The rating agency said AI has moved from experimentation to a boardroom priority, and companies are using acquisitions to compress capability-building cycles. The Hindu Business Line reports that of about 90 M&A deals assessed, those between 2019 and 2024 had focused on digital capabilities like cloud and analytics.

More than 70 per cent of the targets acquired in the past two fiscals were based in the United States and Europe, where Indian firms seek AI talent, proprietary platforms, and sector-specific intellectual property. Key transactions listed by Crisil include Coforge's Rs 20,000 crore acquisition of Encora, TCS's Rs 5,900 crore purchase of Coastal Cloud, Infosys's Rs 3,900 crore buy of Optimum Healthcare IT, and Wipro's Rs 3,150 crore acquisition of Harman DTS.

Crisil said the deals have not materially weakened balance sheets, as most were funded through internal accruals, cash reserves, or share swaps with limited debt. The eventual impact, it added, will depend on successful integration, cross-selling, talent retention, and timely monetisation of acquired AI capabilities.