Tech services: Deal insights series 3Q 2025

Deal Insights Series Q3 2025

Despite a challenging macroeconomic backdrop, technology services deal activity remained robust this quarter. Order books expanded, large deals re-emerged, and investor interest continued to focus on data, AI and cloud-led capabilities. Both private equity and strategic buyers stayed active, with greater emphasis on ecosystem alignment and revenue visibility when assessing targets and structuring transactions.

• The global IT sector continued to face sustained macroeconomic pressure this quarter, driven by potential increases in US tariffs, changes to H-1B visa policies, and rising risks to technology supply chains. While the recent H-1B policy changes are not expected to have an immediate impact, most major service providers have already begun evolving their operating models, placing greater emphasis on localization, nearshore delivery hubs and offshore capabilities.

• Despite broader market headwinds, IT services firms delivered strong financial results, with many reporting over 20% growth in orderbooks this quarter. However, public market valuations have softened, with both Indian and global large caps, digital natives and mid and small caps trading at a lower EV/LTM EBITDA multiple compared to Q2 CY25, along with each experiencing more than a 12% decline in Q3 average stock price compared to Q2 CY25.

• The quarter also marked a return of large-scale transactions (above US$250 million, total 10+), with demand being centered around data, AI and cloud transformation capabilities. Notable deals included Capgemini’s acquisition of WNS, Carlyle’s acquisition of Adastra and Bain Capital’s acquisition of HSO. This was further supported by a renewed push from strategic buyers, who accounted for approximately 44% of transactions (98 of 225), led by Accenture with six acquisitions.

• This quarter saw notable private equity exits to both strategic acquirers and secondary PE transactions, typically after long holding periods. Investor interest remained focused on large, scaled platforms rather than smaller tuck-in deals. At the same time, the Global Capability Center (GCC) segment is gaining strong momentum, and with increasing vendor consolidation, strategic buyers are now actively seeking targets with GCC operations.