Why Hexaware Is on an Acquisition Spree: Digital IT Head Siddharth Dhar Explains

Recently listed IT services firm Hexaware Technologies has been on an acquisition spree. The Mumbai-based company has acquired three different IT services providers with different capabilities in about one and a half years.

It started with marketing analytics firm Softcrylic in May 2024, then SMC Squared in July 2025, and last week it announced the buyout of identity-access management (IAM) services provider CyberSolve.

According to Siddharth Dhar, President & Global Head – Digital IT Operations & AI at Hexaware, the acquisitions are only focused on capability expansion.

"The capability expansion could be like CyberSolve, which is an area that we identify as an area that we want to strengthen, or it could be like Softcrylic, which actually gets us into a completely new area. We've never been a marketing analytics site. So that’s a completely new area that gets opened up for us. Or it could be like SMC Squared, which actually, you know, again, is capacity expansion in a market that we traditionally haven’t played in, which is the GCC market," he said in an exclusive interview with Outlook Business.

In the latest deal, the company would pay about $66 million over time. For the Virginia-based firm, Hexaware will pay $34.5 million upfront, while the remaining payment of $31.5 million is contingent on financial performance. The company, led by CEO Mohit Vaish, last year reported a revenue base of $26 million. It is a specialist in Identity and Access Management (IAM) – a fast-growing segment within the cybersecurity ecosystem.

"The company (Hexaware) views the deal as a capability-led acquisition executed at an attractive valuation; they also noted that the margins are comparable and the acquisition is marginally EPS dilutive," said JM Financial in a note on November 10. CyberSolve reported nine-month calendar year 2025 revenues of $18.5 million.

Strengthening Cybersecurity

He explains that Hexaware has been "on a quest to strengthen our cybersecurity portfolio for the last two years."

"About two years ago, we analysed the areas that needed improvement. While we already had a strong portfolio of cybersecurity services, there were some white spaces that required reinforcement — and identity was at the top of that list. We already had customers in the identity space, but none at the size and scale of Moe’s at CyberSolve. So we knew early on that this was an area to focus on from an inorganic expansion perspective," Dhar added.

Over the years, CyberSolve has built a specialised set of offerings and assembled a team with deep expertise in identity and access management (IAM), said CyberSolve CEO Mohit Vaish.

"We’ve also developed our own product offerings, distilling years of experience into practical solutions. We serve customers across North America in various industries, including banking, logistics, and retail — many of them large Fortune 1000 companies," he added.

Executives also said that there isn’t a single shared customer between CyberSolve and Hexaware, which means there’s tremendous headroom for cross-selling and expansion.

"We started partnering with CyberSolve earlier this year and began pursuing some opportunities jointly. We found strong synergy in the field, customers appreciated the deep expertise we brought together, and our teams collaborated seamlessly. This alignment on the ground reflected a cultural synergy as well. When teams work well together and customers recognise that, it signals a genuine cultural connection, and that gave us great confidence as we progressed through the acquisition process," said Hexaware's head of Digital IT Operations & AI.

Rising Ransomware Attacks

The acquisition also comes at a time many western clients of Indian IT firms have been hit by cyberattacks. In April this year, British retailer Marks & Spencer suffered a sophisticated ransomware and data theft incident that disrupted its online operations and was estimated to cost the company hundreds of millions of pounds. Though TCS clarified that none of its systems were compromised.

Later, between August and September, Jaguar Land Rover (JLR), another long-time TCS client, faced a severe cyberattack that halted production and resulted in data theft. The incident prompted greater scrutiny of third-party access and vendor risk management across the outsourcing industry.

Meanwhile, another IT giant, Cognizant, was hit by a lawsuit in California, US, from its client The Clorox Company in July this year. Clorox alleges that a major cybersecurity breach in August 2023 was enabled when hackers gained access to its network by calling Cognizant’s service desk and obtaining password resets and multi-factor authentication resets — without any proper identity verification being performed.

"The last few years, ransomware has become the biggest talking point in cybersecurity. And I think all ransomware attacks eventually can be traced to the compromise of an employee's identity. Companies almost have no choice but to really strengthen their identity and access management processes, their identity and access management deployments, and their identity governance practices. Which is why this is such a fast-growing segment," said Siddharth Dhar.

Expected Weaker Q4

The acquisitions also come at a critical time for the firm, which is operating in a market hit by slower discretionary spending and global trade uncertainty due to US tariffs.

For the September quarter, Hexaware Technologies reported 3.4% quarter-on-quarter (QoQ) growth in constant currency (cc) terms and 5.2% year-on-year (YoY) growth. Revenue in US dollar terms grew 3.3% QoQ and 5.5% YoY, broadly in line with consensus market estimates of 3.5%.

Growth was driven by the Healthcare and Insurance segment, which rose 11% QoQ (helped by licence revenue), and the Manufacturing and Consumer segment, which grew 16% QoQ (boosted by contributions from the SMC acquisition). These gains were offset by declines in High-Tech and Professional Services (HTPS), down 7.6%, and Travel, down 8.8%. HTPS was affected by budget cuts at two clients, while Travel saw project closures.

Earnings before interest, tax, depreciation and amortisation (EBITDA) margins excluding other income expanded 490 basis points (bps) quarter-on-quarter to 17.3%. Adjusted EBITDA margin was marginally lower on a sequential basis. Including other income, EBITDA margin expanded 30 bps QoQ, supported by operational efficiency (+40 bps) and foreign exchange gains (+110 bps), partly offset by lower licence revenue (-70 bps) and higher travel and medical costs (-50 bps). Profit after tax (PAT) stood at ₹3,699 crore, slightly below the market estimate of ₹3,809 crore.

During the earnings call, Hexaware management indicated that the overall environment has stabilised and is showing early signs of recovery. The company expects calendar year (CY) 2026 to be stronger than CY2025, driven by a rebound in short-cycle deals and the ramp-up of large consolidation contracts. Deal activity is improving, with two large consolidation wins and two more in the pipeline. The total deal pipeline stands at a record $3 billion-plus, though it remains inflated due to delayed decision-making. The company expects this to normalise as pending deals are finalised.

Following the Q3 results, the firm has narrowed its margin guidance to 17.1–17.2% (earlier 17.1–17.4%), factoring in wage hikes effective October 1. For Q4 CY25, the management expects flat growth due to furloughs and the US federal government shutdown. Near-term results will also be affected by H-1B visa transfer restrictions.

According to JM Financial, besides seasonal softness in Q4 and an unfavourable comp (licence sale in Q3) could result in a sequential decline next quarter. Motilal Oswal Financial Services has also given a similar outlook.

"We believe the demand environment is largely unchanged, and short-term challenges persist," the brokerage said in a note on November 10.

It explained that the temporary US government shutdown has restricted H-1B visa transfers between employers, likely constraining onsite growth in the near term. This unexpected factor adds to headwinds such as furloughs and budget cuts in some professional services accounts, which may weigh on fourth-quarter performance.

However, Dhar says the acquisitions are "not driven by any other considerations."