Why Indian IT firms are spending billions to gain Salesforce expertise

San Francisco-based Salesforce Inc develops software to manage client inventory tracking, sales, ticket resolutions, and data entry. It even tracks marketing campaigns and keeps a log of customer engagements. Homegrown IT services companies customise this software and integrate it into their clients’ back-end IT systems.

Over the past decade, the country’s largest information technology (IT) services providers have spent at least $2 billion to acquire firms aimed at improving their customer management software offerings. These acquisitions suggest that their clients are becoming increasingly reliant on customer data for deeper insights, which the IT firms use to automate processes and systems.

Salesforce expects 10% full-year growth at best in FY26. Indian IT services companies are looking to piggyback on the growth of Salesforce’s software and its agentic AI capabilities to shore up their own revenue at a time of uncertain demand.

“With time-tested approaches such as reliance on large deals, vendor consolidation and partnership with GCCs providing only a limited canvas for growth, we are now seeing a series of acquisitions focused on expanding high-value service offerings and jump-starting AI-advisory-led growth opportunities,” said Ramkumar Ramamoorthy, partner at Catalincs.

To be sure, Salesforce ended last year with $37.9 billion in revenue, up 9% from the preceding year. This makes it only slightly larger than Mumbai-based Tata Consultancy Services (TCS), which ended FY25 with $30.18 billion in revenue.

Shifting AI battleground

TCS announced on 10 December that it has acquired Coastal Cloud, a Florida-based tech consulting firm, for $700 million. Coastal Cloud, which ended last year with $132 million in revenue, helps firms run their businesses better by offering solutions and people proficient in Salesforce, a customer relationship management (CRM) software provider.

For TCS, the deal comes two months after it acquired ListEngage, a Massachusetts-based digital marketing services firm, for $73 million. According to the company, that too was aimed at strengthening its Salesforce capabilities.

To put this in context, the cost of the two acquisitions is higher than any large client contract TCS won in the past two years.

“The acquisition significantly strengthens TCS’s AI-led consulting, multi-cloud Salesforce services, and mid-market access, aligning with the sharp rise in AI-driven deal activity across the IT services landscape,” said HDFC Securities analysts Amit Chandra and Vinesh Vala.

Phil Fersht, chief executive of HFS Research, a Massachusetts-based IT consulting firm, said, “For a company that built itself on organic growth, the Coastal Cloud acquisition signals that the AI battleground has shifted to industry workflows and front-office customer operations.”

Cognizant stays ahead

However, TCS was slow to hop onto the bandwagon.

Fourth-largest Wipro Ltd was one of the first large IT services companies to acquire companies with Salesforce capabilities. It bought Appirio in October 2016 for $500 million, and about four years later, acquired 4C for about $80 million.

Second-largest Infosys Ltd acquired Fluido in September 2018 and Simplus in July 2020 for a total amount of $320 million.

Yet, it’s Nasdaq-listed Cognizant Technology Solutions Corp that has been the most active spender on CRM amongst the country’s top IT outsourcers. The New Jersey-based company acquired four companies, including SaaSfocus in August 2018, El-Technologies and Code Zero in February 2020, and Lev, a month later. The company has not disclosed the financials of any of these acquisitions.

Pramod Gubbi, founder of Marcellus Investment Managers, attributed a spurt in such acquisitions to the growth of software-as-a-services (SaaS), which includes the licensed sale of software specialising in certain niche features.

“SaaS has taken off over the last couple of decades and that has created a plethora of such niche software tools,” he said. “Many of these can be hosted on the cloud and do not have major infrastructure requirements.”

According to Fersht, the focus on Salesforce systems to win large transformation deals comes when mega contracts have been scarce due to uncertain demand amid tax flip-flops and strained labour mobility.

“Salesforce, ServiceNow, and cloud platforms remain anchor technologies for transformation deals. Enterprise leaders need deep workflow expertise and US-based talent to reinvent sales, service, and marketing for the agentic AI era,” said Fersht. “The Salesforce ecosystem is fragmented, making acquisitions faster than building from scratch.”

A third expert attributed such acquisitions to a hazy growth outlook.

Mid-cap IT firms moved early

While the IT large-caps spent upwards of $1.5 billion on such acquisitions, the smaller peers were not far behind.

Mid-cap IT services companies–earning between $1 billion and $5 billion in revenue–also started much earlier. At least two, including Persistent Systems Ltd and erstwhile Mindtree (now part of the sixth-largest LTIMindtree Ltd), acquired companies specialising in Salesforce in 2016, the same year Wipro acquired Appirio.

Mindtree bought Magnet 360 in January 2016 for $50 million, while its ninth-largest peer, Persistent, acquired PRM Cloud Solutions for an undisclosed amount and Parx Werk AG for about $17 million in July 2017. Two years later, it acquired Youperience for about $8 million.

Coforge Ltd, India’s seventh-largest IT services firm, acquired Whishworks in 2019 for $41 million, while the eighth-largest Mphasis Ltd acquired Silverline in October 2023 for $132 million.

Sonata Software Ltd made its largest acquisition in February 2023. It acquired Quant Systems, a Texas-based data analytics and cloud modernisation company, for $160 million.

Mid-caps stand to gain more from such acquisitions than their larger peers, said Gubbi. “Salesforce and related CRM technologies move the needle more for the mid-caps as they have domain-specific focus. Such acquisitions can help these companies grow faster in those niche domains.”