How and why Indian IT companies like Infosys, Wipro are taking the ‘acquisition route’ to grow

Indian IT companies like Infosys, Wipro, and HCLTech are turning to acquisitions to meet investment needs in new areas like Generative AI (GenAI), a report has said, adding that this is because the organic expansion opportunities are limited in a cautious global market.
According to a report in The Economic Times, Phil Fersht, CEO and chief analyst of HFS Research said that the IT and BPO services markets are currently flat, and that “mergers and acquisitions activity will increase over the next 12 months.”
“Most new acquisitions will be in areas that add incremental revenue, such as Cognizant adding Belcan to add aerospace and engineering, Wipro and Rizing to add SAP consulting depth, and Accenture and Udacity to add tech learning at scale,” added Fersht.

Infosys acquired three companies in the past year: They acquired Danske Bank's GCC unit Danske IT for $454 million, boosting their presence in the Middle East; invested $34 million in InSemi Technology Services; and $480 million in Germany's in-tech Holding GmbH to strengthen their research and development (ER&D) capabilities.
Wipro invested in insurtech firm Aggne and SDVerse: Wipro acquired a majority stake in insurtech firm Aggne for $66 million and a minority stake (27%) in the automotive software marketplace SDVerse for $5.85 million.
HCLTech focusing on strengthening its position in the telecom vertical: India's third-largest IT player, HCLTech, acquired two German companies – a 100% stake in ASAP Group, an automotive engineering services provider, for $279 million, and a business division of Hewlett Packard Enterprise's Communications Technology Group for $225 million.
In February, Tech Mahindra completed the acquisition of Orchid Cybertech Services (OCSI), a Philippines-based BPO firm, for $3.27 million.
Meanwhile, US-based Cognizant this year acquired private equity-backed digital engineering firm Belcan for $1.29 billion (around Rs 10,700 crore). It also bought American software firm Service Now's partner Thirdera. Accenture, the largest global giant in the space, made $2.3 billion investments across 12 acquisitions in Q3FY24.