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Published on: May 18, 2023, 4:46 p.m.
Coforge achieves a milestone
  • Singh with his top brass: triggering a massive turnaround

By Ritwik Sinha. Consulting Editor, Business India

For the top brass of Coforge, the announcement of quarterly and annual results in an event in Delhi late last month was more than just a regular affair; it was a momentous occasion or ‘big day’ as CEO & Executive Director Sudhir Singh defined it. The IT firm made history by crossing the $1 billion revenue mark for the first time, marking a major milestone in its growth trajectory.

This is a multidimensional feat for the company which has an interesting storyline spanning just under two decades and involving several interesting sub-plots. This includes its birth as a high-pedigree entity, NIIT Technologies, springing from the well-known training major’s roots, which quickly achieved a respectable revenue scale by 2010. However, it then got stuck in a specific stagnant trajectory, leading to a change in the leadership team and management around the end of the last decade. The new team has since triggered a massive turnaround, putting the company on a higher growth trajectory; something many would have expected it to achieve earlier, given its pedigree.

“When it comes to the billion-dollar club of Indian IT firms, I think there are currently not more than 10 players. So, it is no doubt a feat. The IT leadership base is expanding, with players like LTI Mindtree or Coforge being looked upon as the next shining signposts,” says industry veteran Harish Mehta (founder chairman NASSCOM and author of the recently released bestseller ‘The Maverick Effect’ which discusses the different strands of India’s IT revolution in the last four decades).

Sudhir Singh, the man credited with triggering the turnaround affirms the company is now well positioned to make its presence on the IT horizon felt more prominently in the coming years, now that the first crucial level has been crossed. “I think, touching the next billion mark will not be that time consuming an affair, considering the strength that we have developed on several fronts in aligning with the changing tides in the global IT sphere,” he states emphatically.                 

Turnaround saga

If you intend to examine the nearly two-decade journey of Coforge, with a chronicler’s precision, there is a high probability you would divide its journey into two distinctive parts – from 2004 to 2017 and then 2017 till now. In 2017 there was a change in leadership with the entry of Singh. This was followed by a complete management change in 2019 when the stalwarts of the Indian IT industry and original co-promoters of NIIT Technologies (Rajendra Pawar and Vijay Thadani) sold their stake to the noted PE firm, Baring Private Equity Asia. With the change in management, the company also received a new name in 2020 – Coforge.

Although a questionnaire sent to Rajendra Pawar’s office to get his perspective on the formation of the firm and his exit did not elicit a response, a theory doing the rounds among industry insiders is that the company was finding it difficult to expand after reaching an annual revenue trajectory of $400 million in 2010. At the time, the leadership team was probably not sufficiently responsive to market challenges as compared to the competition.

To overcome this state of operational inertia, Sudhir Singh was invited to join as CEO and steer the ship. He recalls: “When I was offered this position, Pawar clearly told me we need to fuel the growth here. He was absolutely clear in his mind that in the IT services industry, the only thing for which a premium is paid in the market is growth. Everything else is secondary. When I was appointed, the organisation was not a young entity anymore, but rather a mature organisation which was not growing.” 

Quite interestingly, several market analysts believe that Pawar and Thadani, the pioneers of computer retail training in the country may have been somewhat late in floating a dedicated IT services firm. “By the time they entered the market, there was a well-established group of A-listers who were growing at a phenomenal pace and were increasingly becoming credible names. Quickly rivalling them was not possible. But even then, they managed to build a base which was not very small during their first decade.

The company, however, lacked aggressiveness on many fronts including investments in scaling up, which prevented it from going beyond its mid-tier identity,” says a senior official of a leading IT firm who did not wish to be named. However, industry veteran Harish Mehta strongly counters these assumptions. “In hindsight, you can say anything. But there is a critical difference that you need to understand – for original promoters, the key focus is wealth preservation. But when a bunch of investors take command of the firm, the focus shifts to wealth creation,” he says.

And here Sudhir Singh seems to have been quite successful in steering the ship out of choppy waters and placing it onto a smooth-sailing route in calm waters where pace acceleration is possible. When asked about the critical changes he made to bring about the turnaround, Singh narrates a series of strategic steps which triggered the desired results.

“Firstly, I shifted the centre of gravity of the leadership from Noida, with the majority of our top executives relocating to major markets rather than operating from headquarters. And secondly, we hired a new pool of leaders. Each of the 14 leaders we hired came only from top tier companies like Infosys, TCS and Accenture. We wanted leaders who had experience operating on a large scale and were comfortable with the idea of going from $400 million to billion-dollar and bigger trajectories,” he explains.

The other critical strategic makeover included abandoning the ‘doing everything’ strategy and instead focusing sharply on a few verticals like BFSI and TTH (travel, tourism and hospitality) and their sub-domains. “For instance, we decided that in insurance, we would only focus on the property and casualty (P&C) sub-domain and nothing else. And in travel, airlines and airports became the key focus points. So, we not only walked away from industries, but even sub-domains to bring a sharp focus to a set of segments we chose to align with,” he further elaborates.

  • The company has some large-scale deals in the offing – it recently signed an extended five-year contract with Tokio Marine to be a global SI and digital transformation partner after being an IT implementation partner in the UK

The effective implementation and harnessing of the strategic cornerstones mentioned above have clearly brought about the desired results and the company’s leadership team is now looked upon as an asset optimally utilising the vast experience they cumulatively bring to the table. Singh, who operates out of New Jersey, had earlier served with leading firms like Unilever (Hindustan Lever), Infosys and Genpact.

He had spent close to a decade with Infosys in the US where he served as the Head of the Infosys South-West Geo and also founded and ran the Infosys Global BFS Payments and Cards Portfolio. At Genpact, he was the Chief Operating Officer of the Capital Markets and IT Services business. After effectively spearheading a turnaround at Coforge, he is now also looked upon as an emerging leader on the Indian IT horizon. 

The profile of other key leaders, meanwhile, is equally impressive. Vic Gupta, Chief Technology Officer, has over 25 years of IT industry experience that includes 13 years at Microsoft where he conducted multiple, large scale and successful Digital Transformation programmes and initiatives across Fortune 100 commercial enterprises and public sector clients.

Sanjeev Prasad, Global leader - Cloud and Digital, another critical figure in the leadership team, brings more than 30 years of experience as a serial entrepreneur, business leader and CIO for large global corporations. He has been part of the Global Leadership team at Genpact and Sutherland, and was a founder, COO and director of STG International Ltd, a training and IT services organisation which was successfully listed on the BSE in 1999.

Sound base

If Singh was called to forge a new future for the erstwhile NIIT Technologies, there is no gainsaying the fact that he and his team have successfully managed to do it. And while touching the billion-dollar revenue mark could well be perceived as the best tell-tale sign of the turnaround, there are other broader pointers that indicate Coforge is now creating a sound operational base for itself.

As far as its recent financial results are concerned, the company reported a revenue of $1,002 million, marking a 22.4 per cent growth in CC terms over the previous fiscal year. On a broader timescale, since its leadership transition in FY2018, it has more than doubled its earnings, which then stood at $484 million.

Since then, the company has managed a hefty 16.6 per cent CAGR (see graph: revenue growth). Its order book at the end of the just-concluded fiscal year is close to $870 million, executable over the next 12 months, which marks an uptick of over 20 per cent compared to the end of the previous fiscal year. The company’s headcount is now an impressive 22,000, and one key point that the top brass repeatedly emphasises pertains to maintaining one of the lowest attrition rates in the industry – 14.1 per cent.

To mark the one-billion-dollar milestone celebration, the company decided to present all its employees with an iPad, which also contributed to impacting its profit in the last quarter, which went down by 48 per cent (Rs116 crore) against the corresponding quarter number in FY22. “The one-time expense pertained to the cost incurred by the company towards gifting Apple iPads to employees. We have also made provisions towards US listing plans, primarily on legal and banking expenses, and will take a call on the timing of secondary ADR based on market conditions,” says Singh.

  • Coforge: creating a sound operational base for itself

Meanwhile, when one looks at the much broader parameters which underline the company’s strength, the leading verticals are: BFS (30.7 per cent), Insurance (22.6 percent), Travel, Transportation and Hospitality (19.1 per cent), with others account for the remaining 27.5 per cent of the business. The services portfolio is dominated by software engineering (26.2 per cent), followed by Data and Integration (23.5 percent), Cloud and Infrastructure Management (18.3 per cent), Intelligent Automation (12 per cent) Product Engineering (10.1 per cent) and Business Process Management (9.9 per cent).

Company officials strongly underline the fact that new clients are being added at a decent pace while repeat business trends have been quite healthy, at 92 per cent. The company’s strongest geographical market is the Americas, which accounts for the lion’s share of 49.9 per cent of its business, followed by EMEA at 38.9 per cent, with the remaining 11.2 per cent is from other regions.

Key officials point at the differences in strategic approach which have helped the company emerge in a new avatar which is ready to help its clients with a more comprehensive set of services and solutions aligned with cutting edge technological platforms. “Our growth has been broad-based and all our top accounts have grown. With us, clients get a team of experts who invest considerable time in understanding their requirements and offering them solutions on several parameters including L1-L5 processes,” says Gautam Samantha, Executive VP of the firm.

According to Vic Gupta, Chief Technology Officer, Coforge’s owes its recent success to its pro-active stance in preparing a highly qualified talent pool. “To make sure that our employees’ skills remain relevant, we offer multiple internal as well as external learning platforms. Some of this content is powered by our alliance partners such as Microsoft, ESI Learning Portal, Automation Anywhere, Trailhead, Google Cloud Platform (GCP), Microsoft Learn, Udemy, Focus on Force, ServiceNow, Percipio and Globesmart, to name a few. The learning platforms also offer customised domain learning paths in the form of academies like the academy for BFS, Insurance, and TTH,” he explains.

Coforge’s commitment to excel in its offerings, as its key officials point out, has endeared it to many prestigious global clients. For instance, the company recently successfully executed the migration of Etihad Airways’ Passenger Service System (PSS) to Amadeus. “This migration was one of the largest and most complex PSS migrations in recent years, taking 18 months to complete.

The program is a crucial part of Etihad’s strategy to provide passengers with superior and seamless experiences across digital and traditional channels and Coforge’s knowledge and expertise played a crucial role in making it happen,” comments Frank Meyer, Chief Digital Officer, Etihad Airways.

With its rising reputation in the marketplace, the company is forging collaborations meant to further consolidate its profile in the future. For instance, it recently signed a strategic deal with noted data management specialist Denodo to help accelerate business transformation in banks and financial services organisations through agile self-service data delivery and data modernisation, while also addressing key challenges such as security, governance, and migration risk.

“Denodo’s best-in-class data integration and management offering combined with Coforge’s long expertise in design thinking and implementation will stimulate data and analytics innovations among our mutual BFSI clients,” Suresh Chandrasekaran, Executive Vice President at Denodo, commented.

  • We have made provisions towards US listing plans, primarily on legal and banking expenses, and will take a call on the timing of secondary ADR based on market conditions

Cumulatively Coforge has developed expertise across its chosen verticals and sub-segments, collaborating with top global names. In the TTH business, it has partnered with leading global travel technology firm Sabre and worked on core PSS functions like PNR, TTY, SSCI and Schedules. Coforge has cultivated extensive collaborations in airport and border management portfolios with SITA.

The company’s much-discussed Monalisa platform is a cloud-based suite of airline solutions that helps customers realise growth and profitability while maintaining compliance. On the insurance side, its AdvantageGo offering, an innovative commercial insurance and reinsurance software product, is considered to be a cutting-edge solution, augmenting decision-making and helping insurers and reinsurers to quickly reduce cost and proactively manage risk.

The company has some large-scale deals in the offing – it recently signed an extended five-year contract with Tokio Marine to be a global SI and digital transformation partner after being an IT implementation partner in the UK. Furthermore, it has partnered with Duck Creek Technologies for Argyle Insurance’s record-setting implementation journey. Coforge asserts its impressive domain expertise in the BFS vertical, covering Central Banking, Retail and Corporate Banking, Buy-side Capital Markets, Mortgages, and Financial Crime & Central Functions which encompass Risk and Finance.

Time to accelerate

The ascendancy in Coforge’s fortune in recent years seems to have also emanated from its ability to quickly respond to the changing tides in the business immediately after the Covid crisis. “In the pre-Covid era, the IT industry broadly maintained a growth trajectory of 8-12 per cent. But after Covid, things changed dramatically with growing digitisation across the board. For IT players, this meant a new goldmine of opportunity as their customers were allocating incremental budgets to adopt digitisation. FY21 (second half) and the entire FY22 have been the best growth periods for the IT industry in recent history,” observes Deepak Jotwani, VP, ICRA.

Having finally made to the billion-dollar club, the company is setting its sights on even more growth opportunities and accelerations. According to the top brass, in the medium term it will work on expanding its vertical portfolio by gaining strength in specific sub-segments of the health and public sectors. The latter, in fact, is slated to become a major focus area for the company as it currently contributes 8 per cent of revenue. “I can’t talk about specific projects, but there’s one very large iconic government institution in Europe and we are trying to transform the various areas of work they do. Citizen services are becoming critical everywhere,” says Sanjeev Prasad, Global Leader (Cloud & Digital), Coforge.    

According to Singh, the next big frontier for the company will be to reach the $2 billion mark and it is now well positioned to bring in inorganic route options on a larger scale. “We can easily double in size on a $1 billion base even without adding any clients if we continue to execute well. Plus, we will be more pro-active in acquiring firms which could add value to our operations. We made an acquisition in 2020 which has been well integrated in the company and is contributing robustly,” he says. Coforge acquired SLK Global, a BPO unit which is now estimated to have grown to $100 million from around $60 million at the time of acquisition 3 years ago. 

  • The company has one of the lowest attrition rates in the industry

A recent report by brokerage firm Motilal Oswal released after the Q4 result announcement by Coforge clearly underlines the fact that company is on a sound wicket. ‘With continued investments in building front-end, execution and service line capabilities, Coforge is well poised to keep up the growth momentum. It is scaling the existing top accounts with its diversified six service lines and market facing teams,’ says the report. However, while the overall projection for IT firms aligning with the digitisation process in general is positive, the near run scenario looks a bit dicey due to growth pressures in the leading economies accessing Indian IT firm services.

According to a report released by noted credit rating and research agency ICRA in early February, Indian IT services companies have witnessed a moderation in growth momentum in the last two quarters in constant currency terms owing to the base effect and evolving macroeconomic headwinds in the key markets of the US and Europe. “The order book position of leading IT services companies remains strong, which will support growth over the near term. However, evolving macro-economic headwinds may result in lower order inflows going forward. ICRA expects a moderate revenue growth of 9-11 per cent in USD terms in the near to medium term,” explains Jotwani.    

The unfolding near-term turbulence has been factored into Coforge’s FY24 guidance in which it has projected an annual revenue growth of 13 to 16 per cent in constant currency terms. But then, as Singh emphasises, the company has developed a habit in recent years of exceeding its final numbers and this will probably occur in the current fiscal as well. This is hardly an exaggeration, coming from a man who has made such a tremendous difference in the fortunes of the company.


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