FinTech, AI, and cloud lead India’s IT M&A boom in 2024: Nasscom report

FinTech emerged as a dominant player, maintaining its top position with an eightfold increase in strategic deal value. The rapid digital transformation of financial services, coupled with growing demand for technology-enabled solutions, created fertile ground for mergers. Companies sought to acquire capabilities that would position them as leaders in the fast-evolving financial ecosystem.

The Indian technology sector has been a global powerhouse for years, known for its resilience, adaptability, and innovative spirit. The latest "2024 India IT Services M&A Deals Tracker," report published by Nasscom in January 2025, provides an in-depth analysis of the evolving landscape of mergers and acquisitions (M&A) in the IT services domain. Authored by industry leaders Achyuta Ghosh, Nirmala Balakrishnan, and the TechCircle team, the report sheds light on the trends, challenges, and key drivers that defined the sector's M&A activity over the past year.

Despite global economic uncertainties, 2024 was a landmark year for the Indian IT services sector. The overall M&A deal value in this sector rose by an impressive 6.3% compared to 2023, reaching $9.9 billion. This growth was propelled by a resurgence in high-value transactions, particularly during the second half of the year, highlighting the industry's adaptability in navigating complex market conditions.

Strategic M&A deals, focused on long-term goals such as market expansion and diversification, played a pivotal role, contributing 59% ($35 billion) to the total deal value. Interestingly, while the deal volume declined by 13% year-on-year, the increased focus on quality and value-driven collaborations became evident.

Sectoral leadership: FinTech and beyond

FinTech emerged as a dominant player, maintaining its top position with an eightfold increase in strategic deal value. The rapid digital transformation of financial services, coupled with growing demand for technology-enabled solutions, created fertile ground for mergers. Companies sought to acquire capabilities that would position them as leaders in the fast-evolving financial ecosystem.

Travel and mobility technology ranked second, showcasing a significant shift toward larger-value deals. With a growing preference for digitized travel solutions, companies within this sector displayed strong potential for partnerships and acquisitions.

EdTech, media and entertainment, and health tech were also noteworthy contributors, each reflecting the broader trend of digital adoption across various industries. These sectors demonstrated a steady influx of investments as businesses aimed to capture niche markets and address evolving consumer demands.

The strategic imperatives driving M&A activity

Access to intellectual property (IP) and platform capabilities emerged as the foremost drivers of M&A activity in 2024. Companies increasingly recognized the value of acquiring ready-made technological solutions and platforms to accelerate time-to-market and enhance competitiveness. Geographic expansion was another critical factor, with firms leveraging acquisitions to establish a presence in untapped markets, particularly in regions with burgeoning tech ecosystems.

Technological capabilities were at the core of many deals. Digital experience and digital product engineering accounted for 28% of the strategic deal volume. This focus underlined the importance of customer-facing platforms and market-ready solutions. Cloud computing and artificial intelligence were other key areas, collectively representing 20% of the strategic M&A volume. This trend highlights the sector’s commitment to harnessing emerging technologies to drive innovation and efficiency.

One of the most remarkable trends in 2024 was the surge in domestic M&A activity. Deals involving both acquirers and targets based in India experienced a 2.4x increase in value, reflecting the sector's confidence in its homegrown ecosystem. A favorable economic environment and the emergence of mega deals exceeding $100 million fueled this growth. These high-value transactions accounted for approximately 20% of all domestic M&A activity, further emphasizing the strategic focus on scale and geographic diversification.

Challenges and declines amid growth

While the overall deal value painted an optimistic picture, certain challenges persisted. The volume of M&A deals in IT services dropped by 13% compared to the previous year. This decline was largely attributed to cautious sentiment driven by global economic uncertainties. Private equity (PE) deals, in particular, faced headwinds, with a 5% reduction in value and a 17% drop in volume. Rising capital costs and a preference for smaller, niche transactions characterized the PE landscape in 2024.

Despite these challenges, PE investments showcased resilience in key sectors like FinTech, EdTech, and media & entertainment, which collectively accounted for 34% of deal volumes. Travel and mobility were the only sectors to record growth in both value and volume, highlighting their unique appeal to investors.

A blueprint for successful M&A execution

The report provides a comprehensive playbook for organizations looking to maximize value from M&A transactions. It emphasizes the importance of thorough due diligence to identify and mitigate risks. Developing robust contingency plans and maintaining flexibility are crucial for navigating unforeseen challenges. Companies are encouraged to prioritize seamless integration, addressing areas such as change management, technology harmonization, and regulatory compliance.

Continuous monitoring and proactive adjustments are vital for ensuring the success of M&A initiatives. By focusing on achieving synergy realization and return on investment, businesses can derive maximum value from their deals.

The report underscores the need for a balanced approach that combines strategic foresight with operational agility. By learning from the successes and challenges of 2024, businesses can better position themselves to capitalize on emerging opportunities in the global market.

India’s IT services industry has once again demonstrated its ability to adapt and thrive in a rapidly changing environment. With an emphasis on quality-driven collaborations and innovation, the sector is set to play an even more prominent role in shaping the future of global technology.