Thought leadership

Technology Dealtracker: Q1 2024

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India's technology industry showed resilience amidst economic challenges, with modest recovery expected in FY25. Q1 2024 witnessed notable deal activity, especially in M&A, indicating growth prospects in vendor consolidation and transformation projects. Prioritisation of Gen AI signals a shift towards future-ready solutions, while significant AI investments prepare firms for emerging opportunities. Despite market conditions, the industry maintains steady growth, adding to its workforce.

Key insights from the Technology Dealtracker

Optimistic market sentiment: The tech industry in India, estimated at USD 254 billion, showed resilience in FY2024 achieving a 3.8% year-on-year growth compared to 8.1% in FY 2023. Despite growth concerns, a modest FY2025 recovery is anticipated, with lingering challenges in H1 FY25 due to cautious spending. Market sentiment is optimistic with potential US Federal Reserve rate cuts. Demand revival is expected to be gradual, aided by conducive monetary policies and increased private capital expenditure targeting new markets and innovations.

Higher M&A ticket size: M&A activity experienced a notable resurgence, witnessing a significant 46% rise in volumes and a remarkable 6x increase in values, resulting in a higher average ticket size of USD 11.3 million, up from USD 2.8 million in the previous quarter. 

Potential growth in FY25: Despite tough market conditions and reduced hiring, the tech industry added 60,000 employees, totaling 5.43 million, a 1.1% year-on-year growth in FY2024. It is expected to maintain headcount status quo, but FY2025 is likely to see marginal improvement with stabilised macroeconomics and rationalised overcapacity.