A Year of Paradoxes: M&A Trends and Outlook in the Technology Services Sector

Nasscom & EY partnered to release the 2nd edition of the “Tech Insights Series”, analyzing the M&A Trends and Outlook in the Technology Services Sector. The analysis of the deal activity in 2022 as compared to 2021 and 2020 provides valuable insights into buyer strategies, key acquisition themes, and public and private market valuation trends. The report covers subsegment level analysis within IT Services, ER&D and BPM and insights from conversations with industry leaders which indicate that strategic buyers continue to view M&A as a key driver for growth and differentiation.

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Key Findings

With 947 deals, 2022 saw highest deal activity in last 5 years
The deal value at $ 57Bn jumped 2X from 2020 levels but was flattish across 2022/2021 (excluding two $10 B deals in 2021)

Driving consolidation in BPM and Managed Service Provider (MSP) segments
Several large bets placed – 15 out of 23 large ($500 M+) deals in 2022

Emerging technologies like IoT, AR/VR, Hyperautomation, Low Code No Code garnered strong interest from large strategic buyers
Services players are acquiring equity interest in IP/product companies for access to technology and create differentiation

Deal activity softened in Q1 CY23
Select pockets of strategic buyers and PE roll-ups expected to drive deal momentum

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