The domestic IT firms contemplating acquisition of some of the struggling IT services American or European firms larger than their own size could soon become a trend, a new Forrester report says.

The recent acquisition of US-based consulting company Keane by a relatively much smaller private outsourcing firm Caritor, which has its roots in India, reiterates the heating mergers and acquisitions activity in this space, the global technology firm said in a report.

Fuelling this trend further, a growing number of investment bankers are betting big on the India-centric IT entities going after M&As, Forrester's India-based senior analyst and co-author of the report Sudin Apte said.

Tata Steel, which has a capacity of about five million tonne per annum, recently reached an agreement to acquire world's leading steel maker Corus, which has a capacity of over 19 million tonnes per year.

Bankers are seen to cajole little-known companies to adopt "approach-to-market" of Indian or India-centric IT companies in a bid a to gain size and operational flexibility.

With such acquisitions, the domestic companies are aiming to expand their onshore delivery capabilities in a bid to remain competitive while lower operating margins and market cap of the struggling global firms makes them a good target acquisition.

This trend might accelerate competition among the tier two vendors and such deals could spell good news for the customers, who want healthy service providers to deliver business globally and maintain rich industry-specific business knowledge, the report said.

There were major acquisitions recently by the large multinationals such as Capgemini purchasing Kanbay and EDS taking over Mphasis - but many are still struggling to adapt to the new IT services paradigm.

Likewise, large India-based service providers have been making smaller, albeit strategic, acquisitions to build out their own global delivery models and strengthen their US and EMEA-based consulting capability and business alignment.

Forrester Research Senior analyst Paul Roehrig said, "The M&A activity is heating up and this is another shot at the legacy multinational firms that, in many cases have struggled to consistently create real market value and delight customer satisfaction."