Coforge and CEO Sudhir Singh take a big leap in a strained year for IT sector

All this while the rest of the sector limped through a lacklustre year.

Coforge—earlier known as NIIT Technologies—ended the September quarter with $462 million in revenue, up 4.5% sequentially. The company reported double-digit revenue growth over the last three years, at a time when its peers faced headwinds such as low demand, uncertain tax rules in its markets, and tightening visa mobility. Its revenue jumped 31% last year in FY25 to $1.47 billion.

A key factor driving this juggernaut is stability at the top, with Sudhir Singh heading the company since May 2017.

Singh, who spent almost a decade at Bengaluru-based Infosys Ltd and then served as chief operating officer of IT services and capital markets at Genpact in July 2010, took over the reins of Coforge in May 2017. He is the longest-serving chief executive among the country’s largest IT services firms.

During this time, the company's revenue grew more than four times, ending last year with $1.47 billion. In contrast, Mphasis Ltd’s revenue grew more than twice over to $1.68 billion, whereas that of Persistent Systems Ltd rose more than thrice to $1.41 billion.

However, this journey was fraught with challenges. The covid-19 pandemic, which benefited most of the country’s IT service providers as companies sought to digitize their operations, hurt Coforge due to its business pattern.

Transport companies were Coforge’s second-largest cash cow, making up about 28% of its business in FY20. As pandemic-induced lockdowns brought travel to a standstill, Coforge’s share of business from the vertical dropped to less than a fifth of its overall business in 12 months.

The company’s gaze then turned to scale its business with banks with a sharper focus on delivery. “Sudhir's approach of directly engaging with clients in their location and his focus on delivery execution to land repeat business enabled us to cruise past established IT services players in key accounts and grow revenues,” said a former executive who was a vice-president with the firm during the time.

Behind this growth in the books is a well-oiled machine that drives weekly metrics on new ideas, bid proposals for new projects, and a clear roadmap for AI.

“We have learned over time that for us at Coforge, the single most important measure for turning in year after year sustained performance is every week's count of proactive large-deal proposals submitted,” said Singh, during the company’s post-earnings conference call on 24 July.

The company has also started working on a big bet, which can range from a geographic expansion to a new business unit or a new partnership.

In a conversation with Mint on 28 October, Singh said his “deal solutioning” team was his company's unique moat. “The solutioning engine of Coforge is not configured or staffed by the same calibre of people as is the case with most of the Indian based SIs (system integrators)," Singh told Mint. "Our solution engine is in the market. It's not in the backend. The calibre of folks that you encounter in our solution engine are folks who've been hired from McKinsey, BCG, and Deloitte over the years, and they have been very strongly fused.”

He shed light on the company’s focus on its sales team, adding that he regularly talks to his sales leaders about the number of large deals each signed and how many they plan to sign in the next two quarters. “If you sign large deals, if you develop an execution enterprise-wide muscle that is forever focused on the next proactive proposal, that becomes a very significant differentiator,” said Singh.

For now, it appears the company’s efforts have borne fruit. The wins were celebrated as hard as the work that went into them. A second executive said that upon crossing the $1-billion-revenue mark two years ago, Coforge gifted iPads to each of its 21,000 employees. “It felt surreal. We were taken by surprise when some people from Apple came in with large packages and started handing out iPads to everyone,” the executive said.

Singh’s generosity, however, follows a rigorous process, which has led executives to call him a hard taskmaster. “He is not the calmest of bosses when things aren’t going his way. But that is fine because of his passion for the company,” said a third executive, adding that “he follows up on the smallest of ideas to improve business or internal operations, even if it comes from the junior-most employee.”

His methods have reaped dividends.

In March this year, when big-ticket deals were far and few due to low demand, IT outsourcers were grappling with fluctuating tax rules in their largest markets, and automation tools were eating into their revenue, Coforge defied the norm.

The company bagged a 13-year software product delivery deal worth $1.56 billion with Sabre, a Texas-based travel-tech company. This was India's second-largest IT deal of the year, and it marked a rare instance of a mid-tier firm bagging a deal valued over a billion. The biggest was Infosys's $1.6-billion deal with the UK's National Health Services or NHS.

“Sudhir kept giving us teasers of a large deal for a while, but we did snot know it would be this big and the ramp-up would be this fast,” said a Mumbai-based analyst on the condition of anonymity.

A third of its $20 million incremental revenue last quarter was driven by travel companies, primarily due to the Sabre deal. In an article dated 10 March, Mint had raised questions about Sabre’s ability to finance this deal, but experts brushed off concerns, noting that Sabre did not have high repayments scheduled despite a large debt pile.

For Coforge, its 2024 acquisition of Cigniti, a Hyderabad-based engineering services firm, contributed to adding $200 million to the company’s retail, hi-tech, and healthcare verticals. A quick ramp-up of the Sabre deal also came as a shot in the arm for the Noida-based veteran. This double impact propelled the company’s revenues over the last three quarters.

The company is expected to fund the acquisition in two tranches, through a share sale worth $1.9 billion and a qualified institutional placement (loan) of $550 million.

This is a bold move that highlights Singh’s progress in the eight years as the company's chief executive. In this time, Coforge’s market cap revenue jumped 20 times to ₹58,212 crore and ₹12,051 crore.

Singh expressed his excitement on the purchase throughout the hour-long analyst day conference, stating that he expects the “next eight years to be as exciting, if not more, than the last eight years.”

At least one analyst said the move bolsters Coforge’s offerings.

“This deal pushes Coforge into a different competitive bracket. It narrows the gap with larger tier-1 firms in digital engineering depth while preserving the agility that mid-caps are increasingly winning on. Expect more Coforge participation in complex, multi-year transformation deals rather than point-solution contracts,” said Phil Fersht, chief executive of HFS Research.

Still, there are concerns surrounding the cost as at least two analysts consider this an “expensive acquisition.”

“It does appear to be coming at a slightly higher price point for a company earning $516 million in annual revenue. Coforge is paying a price that's almost four times the annual revenue. It clearly offers a very good exit to Encora's existing owners, otherwise they may not have agreed to this deal,” said Ashutosh Sharma, vice-president, research director at Forrester.

As far as success of this acquisition is concerned, it totally depends on how well Coforge is able to integrate Encora's capabilities into its broader organization and how well they are able to leverage the synergies across the two organization,” said Sharma.

Beyond this, the company does face its set of challenges.

“Coforge’s FCF (free cash flow) to revenue conversion has fallen sharply over the last five years from 15% in FY20 to 5% in FY25. This was led by i) deterioration in EBITDA margins by 265bps due to higher ESOPs and integration of Cigniti, and ii) increase in capex from 1.7% to 5% of revenues,” said HSBC analysts Yogesh Aggarwal, Prateek Maheshwari, and Sagar Desai, in a note dated 1 September 2025.

The company’s capital expenditure for clients has also been rising, even as it has to pass on artificial intelligence (AI)-led savings to clients upfront. Its capex in just the first six months has exceeded $75 million, up from $30 million in the year ago period, raising concerns among shareholders.

Still, analysts expect Coforge to deliver on its promise, backed by strong deal wins. “Our estimates bake in the strong deal wins and upbeat growth commentary by management. We see USD2bn in revenues by FY27e as doable for Coforge,” said the HSBC analysts.

The company's operating margin jumped 260 basis points last quarter in July-September 2025 to 14% due to the absence of one-time costs and on lower interest expenses, both of which were key pain points for the company.

A second brokerage said it expects Coforge’s revenue growth to almost double from last year. “Despite furloughs in 3Q, considering the timely ramp-up of recently won projects and a strong pipeline, we think 2HFY26F will be a growth period for the company. Overall, we expect Coforge to post ~29% y-y revenue growth (in USD) in FY26F vs 15% in FY25,” said Nomura analysts Abhishek Bhandari and Karan Nain, in a note dated 24 October.

The announcement led analysts to second guess if an acquisition was in the works because a similar episode last year had led to Coforge’s acquisition of Cigniti in December 2024. For now, investors are possibly jittery about a possible QIP, as that could dilute their total shareholding of the company.

At least one analyst note said the latest acquisition was more capability-centric. “This transaction is structurally different: unlike earlier, client-centric acquisitions, Encora is primarily a capability- and leadership-led acquisition,” said Motilal Oswal Financial Services analysts Abhishek Pathak, Keval Bhagat and Tushar Dhonde, in a note dated 26 December.

The analysts added that the deal was “aligned with Coforge’s longer-term intent to deepen its presence in higher-growth, engineering-intensive verticals, where spend visibility and relevance of AI use cases are structurally stronger.”

However, investors remain cautious.

The company’s shares are down 13.4% since the start of the year, while the sector's large caps have declined 2-20%. Mid-cap peers Mphasis, Persistent Systems and Hexaware Technologies had a sombre outing too. Mphasis share prices remain unchanged, whereas Persistent is down 2.4%. Hexaware, which started trading on the stock exchanges in February, saw its shares rise 6%.