Coforge's next growth levers: Healthcare and the US market

At the recently held investor day meet, the Noida-headquartered mid-cap IT firm, Coforge , laid out its overall growth strategy for the coming years. The management reiterated its ambition, telling analysts that it is on course to hit a $2 billion revenue run-rate by the end of FY26, with a 14% EBIT margin.

With strong client stickiness—on average, the top 10 clients have been associated with the company for over 12 years and the repeat business rate stands at 95%—Coforge’s growth strategy involves big bets on capabilities around AI-led engineering, data and ServiceNow. This is coupled with deeper penetration of the Midwest and West markets in North America, as well as Australia and New Zealand, along with account mining and acquisitions to drive future growth.

North America and healthcare bet

While banking and financial services (BFS) and the Americas remain the largest revenue segments, the company’s management sees significant headroom for further growth in the geography. With nearly 60% of revenue concentrated in the East and South regions, Coforge is looking to deepen its presence in the West and Midwest regions of the US.

While BFS and travel, transport and hospitality (TTH) have been core growth drivers, the company sees healthcare as a major growth opportunity. Coforge is banking on its differentiation in the vertical, particularly around AI-driven transformation to automate, optimise and reduce costs, as well as the structuring of outcome-based contracts, among others.

This bet is underpinned by expectations that healthcare AI spending will grow from the current market size of $37 billion in 2025 to nearly $179 billion by 2029. Analysts at Motilal Oswal noted that healthcare and life sciences offer a meaningful opportunity for the company amid rising healthcare IT spending. “Anti-incumbency is visible, with customers dissatisfied with long, costly pilot cycles. Coforge won one client as a result of anti-incumbency with its Quasar Document AI platform,” the brokerage said.

Historically, BFS, insurance and TTH clients have been concentrated in Eastern and Southern America for Coforge. However, the company currently has only 16 out of 216 Fortune 1000 companies headquartered on the West Coast as clients, indicating significant room for expansion. “Coforge is correcting its concentration as it plans to grow its presence in the West and Midwest regions (around 30% of Americas revenue). Its focus verticals would be hi-tech, retail and CPG, and manufacturing in the West Coast and Midwest regions,” the December 9 note stated.

AI bet

Coforge’s AI strategy is centred around its Quasar platform, with investments spanning Quasar AI Studio, Quasar AgentSphere, Quasar Marketplace and Trust AI. The company believes the opportunity lies not just in data, but in AI fluency—the ability to apply AI with a clear business context—along with embedding AI within large deals and adopting outcome-based pricing for AI-led programmes.

Nomura, which hosted Coforge management including CEO Sudhir Singh and John Speight in Mumbai, noted that management believes AI will be a positive addition to revenues, driven by opportunities to sell more technology services. This, it said, would more than offset any deflation arising from productivity gains driven by AI.

The Nomura report also noted that alongside AI, cloud continues to be one of the fastest-growing service lines for Coforge, while deep capabilities in testing and engineering continue to help the company win business. “Going forward (FY27 onwards), while Coforge will not provide margin guidance, it expects 14% to be the floor for EBIT margins. Key drivers for margin expansion would be gross margin improvement (led by solution-led sales) and SG&A improvement (from operating leverage),” the report said.