Is this the boldest AI bet in Indian IT services yet? Inside Coforge’s Encora acquisition

Coforge Limited has signed a definitive agreement to acquire Encora for an enterprise value of USD 2.35 billion in a strategic bet to accelerate its position as a scaled, AI-native engineering services leader. The acquisition will establish a USD 2.5 billion revenue platform with AI, cloud, and data expected to drive USD 2 billion in revenue by fiscal year 2027.

The deal significantly reshapes Coforge’s global delivery model, boosts its nearshore presence in Latin America, and positions it to capitalize on enterprise demand for composable AI platforms and intelligent product engineering. The transaction is structured as a preferential equity allotment, with Encora shareholders expected to hold a 20 percent stake in Coforge once closed.

Why does Coforge believe Encora’s AI-first engineering stack is the platform it needs to scale globally?

Encora’s credentials position it among the few mid-cap tech services firms built from inception with AI-native foundations. Its engineering offerings span intelligent process design, agent-native product development, AI readiness, and AIOps. These capabilities integrate seamlessly with hyperscalers such as Amazon Web Services, Microsoft, Google Cloud, and Snowflake.

At the heart of Encora’s value proposition is AIVA, a composable agentic AI platform designed to help enterprises deploy modular, domain-specific AI agents. This aligns directly with Coforge’s stated strategy to shift away from traditional IT services and build an AI execution platform through proprietary engineering.

The acquisition also brings over 3,100 engineers across Latin America with specialization in cloud-native and AI delivery to United States clients. This strengthens Coforge’s nearshore execution model and significantly expands its geographic exposure, especially in the underpenetrated West and Midwest U.S. regions.

How does the Encora acquisition unlock immediate vertical scale in healthcare and high-tech?

Historically, Coforge has concentrated its vertical presence in travel, banking, and insurance. The Encora acquisition immediately adds material scale in healthcare and high-tech verticals, each projected to cross USD 170 million in annualized revenue.

Encora’s competencies in medical device software, digital health workflows, and AI-enabled healthcare delivery are highly complementary to Coforge’s broader push into regulated industries. This opens up new cross-sell opportunities and positions Coforge to challenge Indian IT peers like Persistent Systems and Cyient in healthtech.

With the combined entity now managing 45 client relationships exceeding USD 10 million in annual revenues, Coforge is strengthening its position to lead long-cycle digital engineering and AI transformation programs for mid and large-cap clients.

What are the financial mechanics behind the USD 2.35B deal and how will it affect Coforge shareholders?

Encora is projected to close FY26 with USD 600 million in revenue and adjusted EBITDA margins of 19 percent. Coforge will acquire the business from Advent International, Warburg Pincus, and other minority shareholders at an enterprise value of USD 2.35 billion.

The acquisition will be funded entirely via a preferential allotment of shares, giving Encora shareholders a 20 percent stake in the expanded share capital. While the deal commands a forward revenue multiple of nearly 4x, Coforge expects to generate earnings-per-share accretion by FY27, with the combined business operating at a 14 percent EBIT margin.

This deal structure avoids cash dilution and signals long-term alignment with Encora’s private equity backers, who may now support further inorganic expansion or public market refinancings post-integration.

How does this signal a changing blueprint for mid-cap Indian IT firms in the AI era?

This acquisition exemplifies the emerging strategy among Indian mid-cap IT firms: building platform engineering capabilities through targeted U.S.-led acquisitions. Unlike traditional outsourcing plays, Coforge is positioning itself as a provider of AI product engineering, data infrastructure, and modular agent-based systems.

Encora’s AIVA platform offers Coforge intellectual property and reusable AI building blocks that go beyond services execution. This positions Coforge to compete not just with domestic IT firms but also with global engineering firms pursuing full-stack AI delivery.

This also reflects a broader capital rotation trend. Private equity exits via strategic buyers are gaining preference over secondary sponsor deals. Advent and Warburg Pincus selling to Coforge suggests growing appetite among Indian firms to absorb global engineering players and repackage them as integrated platforms.

What are the main integration and execution risks that Coforge must navigate post-deal?

Coforge has built a reputation for successful acquisitions, but this deal brings new layers of complexity. Cultural integration will be one of the biggest risks. Encora’s decentralized engineering culture and AI-native workforce may clash with more traditional offshore delivery models.

Retention of senior technical talent within Encora’s AI and platform teams will be critical. Coforge’s ability to integrate AIVA into its go-to-market engine and avoid platform redundancy will determine how fast the combined business can scale.

Near-term margin dilution is another factor. Transitioning to a blended delivery model, managing regional cost disparities, and aligning incentive systems across legacy and acquired teams may delay EBIT normalization.

With 20 percent equity dilution on the table, institutional investors will be watching closely for signs of operational synergy, client growth, and cost discipline.

Will this acquisition meaningfully shift investor sentiment and Coforge’s market narrative?

The acquisition positions Coforge as a credible USD 2.5 billion platform player with deep exposure to AI-led digital engineering. While Infosys and HCLTech are building internal GenAI practices and pursuing ecosystem partnerships, Coforge is taking a more aggressive M&A-led approach to building an enterprise AI foundation.

Investors are likely to view this favorably if integration is smooth and platform revenue scales as projected. The focus on composable agent platforms and nearshore AI engineering could make Coforge stand out among mid-cap IT peers still focused on traditional ADM and BPO services.

However, equity dilution and high execution demands will temper enthusiasm until the company demonstrates durable revenue growth and margin uplift. EPS accretion by FY27 will be a key benchmark, especially if Coforge’s AI-led product engineering business hits the targeted USD 1.25 billion mark.

Key takeaways on what Coforge’s Encora acquisition means for strategy, execution, and market dynamics

• Coforge has agreed to acquire Encora for USD 2.35 billion, creating a combined platform with USD 2.5 billion in projected revenue by FY27.

• The deal brings over 3,100 nearshore AI engineers, significantly expanding Coforge’s U.S. delivery capabilities and client base.

• Post-acquisition, healthcare and high-tech verticals will each exceed USD 170 million in annual run-rate revenue.

• Encora’s AIVA platform and AI-native engineering profile position Coforge as a credible platform engineering player.

• The transaction is fully equity-funded, with Encora shareholders receiving a 20 percent stake in Coforge’s expanded share base.

• Execution risks include talent retention, cultural integration, and near-term margin dilution before EBIT normalization by FY27.

• The move signals a broader trend of Indian IT firms acquiring U.S.-born AI specialists to accelerate engineering-led growth.

• Investor sentiment will hinge on Coforge’s ability to convert platform synergies into accelerated EPS and revenue gains.