IT services M&A activity hit $14.8 billion across 449 deals in the first half of 2026, proving the sector’s dealmaking engine still runs hot despite choppy economic conditions.
Cloud, data and analytics, cybersecurity, and managed services drove the bulk of transaction flow, according to an EY India report released Wednesday. The figures arrive against a backdrop of softer discretionary spending, persistent macroeconomic uncertainty, and AI-powered disruption reshaping buyer priorities.
Rather than retreating, acquirers have shifted focus toward scale, vertical depth, and ecosystem positioning. Artificial intelligence now permeates nearly every acquisition conversation, even as fundamentals like client relationships and delivery capability remain the core evaluation criteria.
Healthcare and financial services specialists look poised to command premium interest. Regulated industries increasingly demand sector-specific expertise for AI-enabled transformation work, making those firms particularly attractive targets.
Deal volume stayed roughly flat compared to the 456 transactions recorded in H1 2025. However, seven large transactions concentrated much of the disclosed value. Strip those out, and announced deal value lands near $4.5 billion, signaling a healthy but more selective market.
Strategic buyers claimed approximately 47 percent of deal volume. Private equity platforms executing roll-up strategies represented 36 percent, while direct PE investments accounted for 17 percent.
Shivani Nagpaul, Partner for Investment Banking in Technology at EY India, noted that acquirers still weigh fundamentals heavily: client relationships, sector expertise, and delivery scale. Those capabilities now get evaluated through an AI lens as companies position for large-scale transformation programs. Buyers will pay for strategic assets, she added, only where the business case and long-term economics justify the price.
Meanwhile, PE platforms formed during the 2020-22 window have entered their exit phase. Assets with proven scale, vertical specialization, ecosystem relevance, and resilient standalone economics should attract the strongest buyer interest.
Large and mid-sized IT services firms pursued acquisitions to deepen capabilities and improve positioning for AI-enabled mandates. Indian and global acquirers announced deals spanning healthcare, cloud, AI infrastructure, cybersecurity, data, and engineering services.
The report projects M&A activity through the remainder of 2026 will stay active but selective, with disciplined buyers competing for assets that combine strategic fit with durable economics.
