Coforge’s $2.35 Billion Encora Acquisition Signals a New Era in AI-Led Engineering

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Coforge’s announcement of its $2.35 billion all-stock acquisition of US-based Encora marks one of the most significant transactions in the global engineering, research, and development (ER&D) services sector. The deal positions the Indian IT services firm among a select group of global leaders capable of delivering enterprise-scale, AI-led engineering solutions, at a time when artificial intelligence is rapidly moving from experimental pilots to mission-critical deployments.

Speaking during an analyst call on December 26, Coforge Chief Executive Officer Sudhir Singh described the acquisition as transformational, not only in terms of scale but also in capability. According to Singh, Encora brings an “AI-native engineering DNA” that few technology services companies worldwide possess, particularly within large Fortune 500 enterprises.

“This acquisition will create an approximately $2.5 billion technology services powerhouse with deep strengths across AI-led engineering, cloud, and data services,” Singh said. The announcement also confirmed Moneycontrol’s earlier exclusive report that Coforge was in advanced discussions to acquire Encora, potentially making it one of the largest deals in the ER&D space to date.

Moving From AI Promise to Enterprise-Grade Execution

While many technology firms and startups promote AI capabilities, relatively few have demonstrated the ability to deploy AI systems at scale within complex enterprise environments. This is where Encora stands apart. Operating at the intersection of AI, data, and cloud technologies, Encora offers capabilities that include agent-native product engineering, AI foundations, data readiness, and AI-driven operations (AIOps).

Unlike early-stage AI startups that often remain confined to proofs of concept, Encora already works deeply embedded within large enterprises. Its engineering teams typically have multi-year tenures within client organisations, giving them deep institutional knowledge and long-standing trust.

“Encora is one of the select technology services firms with an AI-native DNA that already operates inside Fortune 500 enterprises,” Singh noted. This maturity allows the combined entity to move beyond experimentation and deliver production-grade AI systems integrated directly into core business workflows, rather than limited productivity tools.

Agentic AI as a Key Differentiator

One of the most significant assets Encora brings to Coforge is its internal agentic AI platform. Management emphasised that this is not a conceptual or demonstration product, but a composable, production-ready system capable of orchestrating intelligent workflows across both engineering and business functions.

“This is not slideware. It is a composable agentic platform,” Singh said, highlighting the platform’s ability to support real-world enterprise use cases. As agentic AI gains traction globally, the platform strengthens Coforge’s ability to deliver next-generation solutions where autonomous AI agents collaborate across systems and processes.

Scale Converts Capability Into Leadership

Although Encora had already established itself as a strong player in AI-led engineering, its relatively smaller scale limited its participation in large, multi-service transformation deals. Coforge’s acquisition addresses this constraint directly.

By combining Encora’s AI-native strengths with Coforge’s global delivery engine and 11 technology service lines, the merged company gains both depth and reach. Management expects the combined entity to target a $2.5 billion revenue base, with nearly $2 billion coming from AI-led engineering, cloud, and data services by FY27.

This scale transforms Encora’s technical excellence into global relevance, allowing the company to compete for larger and more complex digital transformation programmes.

Strengthening the US and Nearshore Presence

The acquisition significantly enhances Coforge’s footprint in North America, particularly in the US West and Midwest regions. Before the deal, only around 25 percent of Coforge’s North American revenue originated from these areas. Post-acquisition, the company expects its North America business to expand by roughly 50 percent, reaching over $1.4 billion in revenue.

Encora also adds more than 3,100 nearshore professionals across Latin America. This nearshore talent pool provides greater flexibility to serve US clients with high-end engineering capabilities while reducing reliance on traditional offshore delivery models. The combination of offshore, nearshore, and onshore resources strengthens Coforge’s competitive positioning in a market increasingly focused on speed, collaboration, and domain expertise.

Large Clients and a Strong Financial Profile

Encora brings with it 11 client relationships that each generate more than $10 million in annual revenue. With this addition, the combined company will have 45 large client accounts at that scale. These relationships are notably long-tenured, with Encora’s top 10 clients averaging over a decade of engagement.

From a financial standpoint, Encora reported revenues of $516 million in FY25 and is projected to reach approximately $600 million in FY26. The company operates at an adjusted EBITDA margin of around 19 percent, reflecting strong operational efficiency.

Coforge expects the combined business to operate at an EBIT margin of approximately 14 percent after amortisation of intangibles. Importantly, management stated that the transaction is expected to be earnings-per-share accretive despite the equity issuance involved in the all-stock deal.

Deal Structure and Strategic Intent

Under the terms of the acquisition, Encora’s shareholders will roll over into Coforge equity and hold approximately 21 percent of the combined company. No cash consideration is being paid to the sellers. Any fundraise by Coforge, including a potential qualified institutional placement (QIP) of up to $550 million, is intended solely to retire Encora’s existing leveraged buyout-era debt.

This structure underscores Coforge’s confidence in the long-term strategic value of the acquisition rather than short-term financial engineering.

A Defining Moment for Coforge

As enterprises globally accelerate large-scale AI adoption, demand is shifting toward partners capable of delivering reliable, production-grade systems at scale. Coforge’s acquisition of Encora represents a decisive step in aligning with this demand.

By combining AI-native engineering expertise, a robust agentic AI platform, expanded US presence, and a diversified talent base, Coforge is positioning itself as a serious global contender in the next phase of enterprise AI transformation. The deal not only strengthens its current capabilities but also sets the foundation for sustained leadership in AI-led engineering in the years ahead.