Encora buy positions Coforge among global leaders in AI-led engineering, says CEO

Coforge

Coforge said its $2.35 billion acquisition of Encora positions the company among a small group of global leaders in AI-led engineering, as enterprises increasingly shift from pilot projects to large-scale AI deployments.

Coforge chief executive Sudhir Singh, speaking during an analyst call on December 26, said Encora brings a depth of AI-native engineering capability that few technology services firms globally possess, particularly at scale and inside Fortune 500 enterprises.

“This acquisition will create an approximately $2.5 billion tech services powerhouse with both the scale and capability across AI-led engineering, cloud, and data services,” Singh told analysts after announcing the acquisition.

The announcement confirmed Moneycontrol’s exclusive, citing sources, that Coforge is in advanced discussions to acquire Encora, potentially marking one of the largest transactions in the engineering, research, and development (ER&D) sector.

From AI promise to enterprise-grade execution

Singh said Encora operates at the intersection of AI, data, and cloud, with capabilities spanning agent-native product engineering, AI foundations, data readiness, and AIOps. Unlike many AI-native startups, Encora already works deep inside large enterprises, with multi-year tenured engineering teams and strong client advocacy.

“Encora is one of the select technology services firms with an AI-native DNA that already operates inside Fortune 500 enterprises,” he said, adding that its engineers have multi-year tenure and deep institutional memory inside client accounts.

The management added that this positions the combined company to move beyond experimentation and deliver enterprise-grade AI systems that are embedded directly into core business workflows, rather than isolated productivity tools.

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A key differentiator, highlighted on the call, was Encora’s internal agentic platform, which management described as a composable, production-grade system rather than a demonstration.

“This is not slideware. It is a composable agentic platform,” Singh said, referring to Encora’s AI platform that enables organisations to design intelligent workflows across engineering and business functions.

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Scale transforms capability into leadership

While Encora had strong AI-led engineering credentials, Singh said the company’s scale limited its ability to pursue some larger and multi-service transformation deals earlier.

The acquisition, he said, converts deep capability into global relevance by pairing Encora’s AI-native strengths with Coforge’s delivery scale and 11 technology service lines.

The combined company is targeting a $2.5 billion revenue base, with nearly $2 billion expected to come from AI-led engineering, cloud, and data services by FY27, according to management.

Also, read: 'AI is infra now': Coforge builds full-stack capability for real-world deployments

US footprint, nearshore talent add leverage

The acquisition also strengthens Coforge’s position in the US, particularly in the West and Midwest, where Encora has a strong client presence. Prior to the deal, only about a quarter of Coforge’s North America revenue came from these regions. Post-acquisition, the company expects its North America business to expand by around 50 percent to more than $1.4 billion.

Encora adds more than 3,100 nearshore professionals across Latin America, giving the combined firm greater flexibility to support US clients with high-end engineering talent outside traditional offshore models.

Also, read: Not waiting for discretionary spend to return, overall tech spend has surged: Coforge CEO Sudhir Singh

Large clients and financial profile

Encora brings 11 client relationships generating more than $10 million in annual revenue each, taking the combined entity’s total to 45 such large accounts. Coforge said these relationships are long-tenured, with the top 10 Encora clients averaging over a decade in engagement length.

From a financial perspective, Encora reported revenue of $516 million in FY25 and is projected to reach about $600 million in FY26, with an adjusted EBITDA margin of around 19 percent.

Coforge said the combined business is expected to operate at an EBIT margin of about 14 percent after amortisation of intangibles, and that the transaction is expected to be earnings per share accretive despite equity issuance.

The all-stock acquisition will see Encora’s shareholders roll over into Coforge equity, holding about 21 percent of the combined company. Coforge said no cash consideration is being paid to the sellers, with any fundraise, including a possible qualified institutional placement (QIP) of up to $550 million, intended only to retire Encora’s existing leveraged buyout-era debt.