Step drills work well, especially in sheet metal.

Another way round the problem is to scribe your circular pattern and use a drill press to drill many 1/8" holes just inside the scribe marks.
As close together as you can - there'll be a lot of them.

Depending on the thickness of the metal you can use a small cold chisel to connect the holes.
But . . . don't do this if the metal is thin or you'll spoil the flat surface.

Fairly thin metal, you can tip the drill sideways and let the flutes do the connecting.
Sounds crude - and perhaps it is - but it doesn't hurt the drill unless you push it too hard.
1/8" drills are pretty cheap anyway.

Use a half round file to clean up the hole out to the scribe mark or better yet, use a mandrel with 80-100 grit sandpaper drum.
Goes fast, but is easy to control.

I've done a few large holes in 1/8" steel plate this way.
Some of them were less than half a circle - "C'ing" the frame for instance.