Coforge’s AI Push Drives Growth as Peers Struggle for Visibility

When fears of AI disruption wiped out billions in tech services valuations earlier this year, the central question for investors was whether traditional IT services firms were becoming obsolete. The mid-size IT company Coforge is trying to answer that question early, and the numbers and analyst commentary suggest it may be ahead of the curve.

Analysts point to strong deal wins, a growing order book, and improving margins as early indicators that Coforge’s AI pivot is translating into business momentum. 

Jefferies notes that the company’s expanding executable order book provides visibility for sustained double-digit growth, while also raising its estimates on the back of improving margins. It maintains a buy rating on the stock.

Industry observers say Coforge has moved decisively compared to many peers. “Coforge's Q4 FY26 results reflect a company that has moved decisively into its AI pivot. The 'OneAI' platform, hybrid 'Mod Squad' delivery model, and a workforce of over 30,000 AI-enabled engineers and forward-deployed engineers (FDEs) represent a serious infrastructure investment,” Praveen Bhadada, CEO and MD of Neovay Global, told AIM.

The numbers offer tangible backing to that narrative. In Q4 FY26, Coforge reported revenue of $489.1 million, up 21.2% year-on-year, while EBIT margins expanded to 16.6%, an all-time quarterly high, rising 430 basis points from a year earlier. Free cash flow rose 80% to $73.7 million, marking its strongest Q4 cash generation to date.

For the full year, revenue crossed $1.87 billion, growing 29.2% year-on-year, with EBIT margins expanding 370 basis points to 14.4%. While reported profit after tax (PAT) for the quarter stood at $67.3 million, this figure included a one-time benefit from reversals of deferred tax liabilities linked to the Cigniti merger. Adjusted PAT came in lower at around $47 million, suggesting underlying profitability remains more modest than headline numbers indicate.

AI as a Value Creator

The debate now is whether this performance reflects a structural shift driven by AI, or a cyclical trend aided by deal closures and cost efficiencies. CoForge’s leadership is clear in its position. 

“We are moving from a world of IT delivery to one of business orchestration,”  Sudhir Singh, CEO of Coforge, said in a quarterly earnings call with analysts. He adds that the company’s engineering outcomes, rather than billing hours, are likely to outperform as AI reshapes service delivery. 

CoForge argues that it is not shrinking the Indian IT services industry, but expanding it. The company estimates that AI is already creating a $160–180 billion opportunity, growing at over 35% annually, with the potential to reach $750-800 billion within five years.

The company draws parallels with the cloud computing cycle, where early disruption eventually created new layers of demand, including migration, integration, and managed services. In a similar fashion, Coforge sees new AI-led value pools emerging across managed services, governance, data architecture, and agent lifecycle management.

Building a Moat in the AI-First Business

To compete in this evolving landscape, Coforge has articulated six core moats: domain expertise, client intimacy, quick agility to innovate, an AI-led delivery model, and a strong AI tech and talent pool.

Its sectoral focus remains a key differentiator. Banking and financial services contributed 26.5% of FY26 revenue, followed by travel and hospitality at 23%, and insurance at 15%. These sectors present complex environments for AI deployment, where regulatory constraints, data governance, and legacy infrastructure often pose greater challenges than the technology itself.

In banking, Coforge is deploying real-time conversational AI assistants for customer support and model validation engines for risk and compliance functions. In insurance, it is building AI-driven underwriting systems that automate document processing and standardise broker submissions.

The travel sector offers another use case, where AI-powered contract intelligence systems extract pricing and discount insights from complex airline agreements. In healthcare and life sciences, the company is working on AI-assisted medical writing tools and requirements engineering systems powered by large language models (LLMs).

These deployments indicate that Coforge is focusing less on generic AI capabilities and more on domain-specific applications, which tend to have higher barriers to entry and stronger client stickiness.

What Coforge Has Actually Built?

At the centre of Coforge's strategy is its proprietary AI platform, designed as a composable architecture. The platform includes a decisioning engine with a knowledge layer, policy enforcement mechanisms, and continuous learning loops. 

It is supported by a model-agnostic gateway that integrates leading AI providers such as Anthropic, OpenAI, Gemini, and Mistral, along with a governance layer and an audit framework. The broader stack includes an agent control plane and AIOps capabilities to maintain system resilience.

The commercial strategy relies on Coforge's Mod Squad, which blends AI agents with human experts such as LLMOps engineers, domain specialists, and senior architects. 

The company claims this model delivers 40–50% faster time-to-market, though its scalability and consistency across large engagements remain areas to watch.

The company has also built a specialised pool of ‘forward deployed’ engineers who are senior AI specialists collaborating with clients daily, co-own business outcomes, and bridge the gap between AI capability and enterprise reality. This model mirrors approaches seen in product engineering firms, where proximity to client workflows is critical for successful implementation.

Internal Use Cases

Beyond client-facing solutions, Coforge is embedding AI across its internal operations. The company reports productivity gains of 25–35% in its software development lifecycle (SDLC) through AI-assisted delivery models. Code generation and review processes have seen efficiency improvements of 40–60%, while legacy modernisation projects are running up to 10x faster.

Operational efficiencies are also visible. AI-driven recruitment screening has reduced hiring costs by around 30%, while internal support systems have cut query resolution times by 30–40%. Financial analysis processes, including anomaly detection and variance analysis, have seen a 40–60% reduction in manual effort.

The company’s internal talent marketplace, powered by AI, is expected to improve fulfilment rates by 12–15%, helping match employees to projects more efficiently.

These internal use cases not only improve margins but also serve as testbeds for solutions that can be extended to clients.

The Encora Acquisition 

In December 2025, Coforge acquired Encora, a software engineering firm with strong AI product capabilities. The combined entity earns about $2.5 billion, with Encora increasing Coforge's North America revenue by 50%. 

Encora offers key assets for AI strategy for its AIVA platform, over 9,000 engineers (including 7,000 AI engineers working on human+agent models), and over 40 clients with active AI projects, about 10 with scaled deployments. 

It has an ARR of over $170 million in Hi-tech, including several $10 million+ relationships, and $170 million in Healthcare across Pharma, MedTech, and HealthTech, boosting Coforge's presence in sectors rapidly adopting AI. 

However, integrating Encora alongside the earlier Cigniti acquisition introduces execution complexity. Analysts have flagged this as a potential risk, particularly as Coforge simultaneously transitions its business model towards outcome-based pricing.

A Mid-Tier Advantage?

Coforge’s performance comes at a time when larger IT firms are navigating slower growth and uncertain demand. In contrast, several mid-tier players have reported relatively stronger momentum.

Persistent Systems reported Q4 FY26 revenue of $436 million, up 16.2% year on year, extending its growth streak to 24 consecutive quarters. Mphasis reported a consolidated net profit of Rs 509.6 crore for Q4 FY26, up from Rs 446.5 crore a year ago, with revenue up 14.4% YoY. Larsen & Toubro Group’s IT arm, LTI Mindtree, reported a 44.6% sequential increase in net profit to Rs 1,387 crore in Q4 FY26.

This divergence suggests that smaller firms may be benefiting from greater agility, allowing them to adapt faster to shifting demand patterns and AI-led transformations.

Coforge’s performance adds weight to the argument that AI may not be eroding IT services as quickly as feared, but is instead reshaping them.

The real test, however, lies in sustaining growth, integrating acquisitions, and proving that its AI-led model can deliver consistent, long-term returns in an industry still undergoing fundamental change.