Coforge’s growth is beginning to outpace that of its larger rivals. But the headline numbers tell only part of the story. The IT services company is expanding through acquisitions, deepening relationships with existing clients and betting that artificial intelligence (AI) can help it grow without adding costs at the same pace.
The distinction matters. Coforge reported revenue of ₹6,170 crores for Q2 FY27, up 53.6% year on year (40.1% in dollar terms). It also reported order intake of $1.04 billion (~₹98.4 billion) and raised its FY27 earnings before interest and tax (EBIT) margin guidance to 16% from 15.5%.
Coforge completed its acquisition of digital engineering firm Encora on April 23, making Q2 its first full quarter with the business on its books. Of the 10.9% sequential growth in constant currency, 3.8% was organic. Encora supplied the rest.
That distinction surfaced during the October 23 earnings call. Vibhor Singhal, analyst at Nuvama Equities, did some arithmetic aloud. Back out the 3.8% organic growth, he said, and Encora looked like a small miss. CFO Saurabh Goel’s reply was short: Encora’s revenue was largely flat.
Coforge’s growth does not have to be about AI. Large deals from existing clients and a tighter cost base can explain much of it. But the company makes the AI case itself. CEO Sudhir Singh called the quarter a tipping point for AI adoption inside Coforge. He tied the margin upgrade to AI, arguing that it is breaking the link between scale and margin.
That matters because the two explanations lead to different conclusions. If relationships drive the wins, the AI-led margin gains are still a forecast. If AI drives them, rivals building similar models could narrow the gap. Coforge has not yet shown which is the case.
Large Deals Come From Existing Clients
Coforge signed eight large deals in the quarter, the most in any single quarter in its history. They contributed almost $500 million (~₹47.3 billion) of intake, and all eight came from existing clients, the company said to AIM.
The repeat-business ratio, the share of intake from existing clients, stood at 95.5%, against 94% in Q3 FY26. A second client has crossed an annualised run rate of $100 million (~₹9.5 billion). The top 10 and top 20 accounts are each growing at 20% or more, CEO Sudhir Singh said on the call.
Singh said most large deals are sole-sourced and driven by proactive solutioning, which lets Coforge avoid price contests with other providers. That differs from LTIMindtree and Persistent Systems, which said in the December quarter that AI-led productivity was shrinking revenue from their largest clients.
Two details temper the picture. Intake now includes Encora, which Q1 intake did not, so the 51% sequential rise is not like-for-like. And President John Speight said advisers are now sourcing deals, a route Coforge has not used before.
AI Changes What Coforge Sells
Coforge said to AIM that it is moving from selling engineering hours to selling outcomes. Nuuron, its enterprise autonomy suite, grounds AI agents in a client’s business context.
Momentuum Blue, a unit of forward-deployed engineers (FDEs), embeds engineers in client teams to deliver working solutions in weeks. Mod Squads are hybrid pods in which agents do the work and humans approve key decisions, then run them.
Both are recent: Mod Squads launched in April and Momentuum Blue in July. Coforge cited a re-platforming programme at one of the largest travel-technology companies as an example, and said it won the work on airline expertise and field-proven AI assets.
The financials do not yet show the model. Coforge reports more than 520 AI engagements across more than 225 clients, with over 260 agents in live operations. Asked on the call for the size and margin of those engagements, management gave no figures. Its newest launch, an Autonomous Software Factory for coordinating AI agents across software development, comes with no disclosed customers or quantified gains.
AI Could Erode the Advantage Behind It
AI is making modernisation and software development more accessible, which is a headwind for specialists, Yugal Joshi, Partner at research firm Everest Group, told AIM. Clients are slow to change their view of providers, he said. They sort partners as strategic, specialist or tail, and the label can last for years. Joshi said Coforge has built intellectual property (IP) and a brand name in hard-to-replicate industries.
The threat sits further down the ranks. AI helps entry-level employees pick up domain knowledge faster, making it easier to compete with an AI-enabled junior. “What will matter more is client-specific context,” Joshi said.
The quarter’s data adds a wrinkle. Insurance and travel, industries Coforge cites as specialisms, grew 3.6% and 1.8% sequentially on an organic constant-currency basis, both below the 3.8% company average. Banking and financial services (8.3%) and government outside India (20.8%, on 6.5% of revenue) led growth.
Three of the eight large deals came from the public sector, including a $230 million (~₹21.8 billion) UK engagement signed in July. One quarter is a small sample.
Rivals Are Adopting Similar Models
The forward-deployed model is no longer Coforge’s alone. TCS is targeting up to 8,900 FDEs and Infosys about 6,000, while Accenture and enterprise software firm Workday have launched a joint programme to deploy AI agents in HR and finance.
Mphasis comes closest. Ravi Vasantraj, Global Delivery Head at IT services firm Mphasis, said in an earlier conversation with AIM that owning the IP itself is meaningless and that the value lies in applying it to a client’s context. Mphasis sends pods of three to five FDEs to customise its Tria platform before scaling delivery. AI-led work made up 63% of its new contract value in the June quarter.
Rivals also disclose more than Coforge does. HCLTech reported advanced AI revenue of $219 million (~₹20.7 billion) and said these services earn margins at least seven to 10 percentage points above traditional work. Infosys put AI at 10.5% of revenue, yet cut its FY27 growth guidance to 1% to 2%.
On organic sequential growth, Coforge’s 3.8% is ahead of HCLTech’s 2.3% in services, though the two define their figures differently. On margins, it trails. HCLTech’s EBIT margin is 18.2% and Infosys’s operating margin is 21%, against Coforge’s 16%. Singh has said Coforge intends to rank among the three highest-margin firms in its industry.
AI revenue is defined differently at each firm, and Coforge does not report it at all.
The Margin Test Comes in Q4
Coforge’s consolidated EBIT margin was 16% in Q2, matching Q1, and management expects 17% in Q4. Most of the gain so far is cost. General and administrative (G&A) expenses fell to 6.3% of revenue from 6.6% in Q1, and G&A grew 15.6% year on year against 53% revenue growth.
Abhishek Pathak, Analyst at Motilal Oswal Financial Services, noted on the call that gross margins had stayed flat. Goel said AI-led efficiencies in existing fixed-price contracts will show from Q4. The uplift comes from those contracts, he said, not from better pricing on future AI projects.
Some deals pass part of the efficiency gain to the client and others do not, Singh said. “We run a real business in the real world,” he added.
Across Indian IT, AI-led deflation still exceeds the revenue AI brings in, Anmol Garg, Senior Vice President and Lead Analyst at DAM Capital Advisors, said to AIM earlier this month.
The quarter showed that Coforge can build and sell AI capability. Q4 will show whether it keeps the value that capability creates.