India's Coforge Buys Encora To Boost AI
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- Last Updated: 29 Dec 2025 at 12:15 PM IST
Coforge has announced plans to acquire the US-based digital engineering and AI-enabled services firm, Encora, for an enterprise value of $2.35 billion. This acquisition will enable Coforge to expand its presence and capabilities in the U.S. and Latin America, while also enhancing its ability to deliver AI solutions.
It also places Coforge ahead of several competitors in terms of size. Encora, supported by Advent International and Warburg Pincus, focuses on developing AI-based products and data engineering services.
However, the question remains as to how this acquisition will ultimately benefit both companies, especially given the growing demand for AI solutions.
How Did The Deal Structure Take Shape?
Coforge is financing the equity portion of the transaction using preference shares at ₹ 1,815.91 per share. The offer price is a 14.5% premium to recent closing prices. Shareholders of Encora will receive a 20% equity stake in the merged company.
Coforge plans to raise $550 million through a bridge loan or a qualified institutional placement to retire existing Encora debt, thereby facilitating a smoother integration process. BDA Partners served as the investment banking advisor to Coforge, with the transaction closing in a period of 4-6 months, subject to regulatory approvals.
The mix of cash and stock is expected to enable immediate execution of the transaction while ensuring long-term alignment. This transaction demonstrates continued consolidation within the IT industry as businesses look to generate revenue from AI.
Revenue Synergies And Growth Projections
Encora generated $516 million in revenues, complementing Coforge's total revenue of ₹120.51 billion ($1.34 billion) in fiscal year 2025, which was up 32% year-on-year, with the primary focus on North and South America, where 58% of its sales are derived from.
The combined entity has set a revenue target of $2 billion in fiscal year 2027, with a 14% Earnings Before Interest and Taxes (EBIT) margin and growth in Earnings Per Share (EPS) by March 2027.
The focus on AI will foster new funding opportunities and stimulate diversification beyond traditional services. The combined capabilities will also accelerate the transition to generative AI platforms for clients.
According to industry estimates by EIIR Trend, the combined Coforge–Encora business could make Coforge the seventh-largest Indian IT services provider by revenue following this acquisition. Encora's speciality areas include AI, product engineering, and cloud services; these offerings of Encora enhance Coforge's strengths in more traditional IT areas.
Consequently, Coforge now has the ability to provide enterprise-level differentiated solutions that assist customers with the process of adopting AI in their organisations.
With the growing interest in generative AI worldwide, this presents an opportunity for Indian IT companies to generate new revenue streams and continue evolving their businesses beyond traditional outsourcing methods.
Geographic And Talent Expansion
This acquisition significantly expands Coforge's presence in the Western and Midwestern United States and adds Encora's 3,100 employees in Latin America, creating substantial nearshore delivery opportunities for American companies.
This influx of southern-based talent will enable 24/7 support, as well as culturally relevant support in several key geographies, while providing opportunities for Coforge to expand its revenue base through Encora's established relationships with hundreds of customers across North America.
With the acquisition of Encora, projected to create $2 billion in additional revenue by 2027, the most pressing question from a technology perspective is: how quickly will the artificial intelligence synergy help increase margins beyond the projected level?
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