MUMBAI: India’s IT dealmakers are putting their money where the algorithm is. Indian technology companies are increasingly turning to acquisitions to build artificial intelligence capabilities, with AI-related transactions accounting for about 70 per cent of the value of deals announced across FY2025 and FY2026, according to an analysis by Crisil Ratings, as reported by CNBC TV18.
Indian IT companies announced deals worth around Rs 45,000 crore across the two financial years, of which transactions involving AI and related technologies contributed approximately Rs 35,000 crore.
Crisil, however, cautioned that the 70 per cent share should not be read as a standalone representation of the broader market, as one sizeable acquisition in FY2026 materially influenced the overall deal value.
The AI rush is also visible in what companies are buying. Of roughly 90 transactions analysed by Crisil, close to half involved businesses with AI or closely related technology capabilities.
But the shopping list extends well beyond AI models. Indian IT firms are targeting capabilities spanning data engineering, digital engineering, engineering research and development and enterprise technology platforms.
The strategy marks a shift from buying companies simply to add scale. Increasingly, the objective is to acquire specialised capabilities that can be plugged into existing client relationships and turned into new technology offerings.
Geography is playing a significant role in that strategy. More than 70 per cent of the companies acquired were based in the US and Europe, giving Indian IT firms access to specialised talent, intellectual property and established enterprise relationships in two of the world’s largest technology markets.
The financing approach has, meanwhile, remained relatively measured. Crisil said companies have largely relied on internally generated cash, existing reserves or share-based transactions, rather than taking on substantial additional debt.
That balance-sheet discipline matters because the AI acquisition spree comes at an interesting point in the industry’s evolution.
For many Indian IT services companies, AI-related business still accounts for a relatively small share of revenue. Moshe Katri, Managing Director-FinTech & Tech-Enabled Services Investment Banking at Wedbush Securities, said AI contributes less than 10 per cent of revenue at many IT services companies.
That leaves companies spending heavily today on capabilities that have yet to become a major revenue engine.
The bigger test, therefore, may not be how much Indian IT firms spend on AI, but how quickly those investments translate into business.
Crisil said the financial impact of acquisitions will depend on how effectively companies integrate the businesses they buy. That includes retaining specialised employees, combining technology platforms, deepening existing customer relationships and converting newly acquired capabilities into commercial opportunities.
The push also comes as traditional technology spending faces a more cautious environment, making acquisitions a potentially faster route to specialised talent and technology than building everything internally.
For now, the relatively modest size of most transactions and limited reliance on debt have helped contain balance-sheet risks. The next chapter of India’s AI deal story, however, will be measured less in acquisition announcements and more in whether those Rs 35,000 crore worth of AI bets can turn into meaningful revenue.