Indian IT services firm Coforge has entered into a definitive agreement to acquire Encora, a California-based artificial intelligence and software engineering firm, for an enterprise value of $2.35 billion. The strategic acquisition is designed to bolster Coforge’s in-house AI capabilities and aggressively expand its footprint across North and Latin America.
Under the terms of the agreement, Coforge will fund the $1.89 billion equity value by issuing preference shares at 1,815.91 rupees each, representing an 8.5% premium to the recent closing price. Encora’s existing shareholders, including private equity backers Advent International and Warburg Pincus, will transition to hold a 20% stake in the combined entity. To address Encora’s outstanding debt, Coforge plans to raise up to $550 million through either a bridge loan or a qualified institutional placement.
The merger is projected to catapult Coforge to become India’s seventh-largest IT firm, overtaking competitors such as Persistent, Mphasis, and Hexaware. Leadership estimates the combined company will achieve annual revenues of $2 billion by March 2027, operating with a 14% margin before interest and taxes. Beyond financial growth, the deal provides Coforge with a workforce of approximately 3,100 employees in Latin America, significantly strengthening its delivery capabilities in the Western and Midwestern United States. The transaction, advised by BDA Partners, is expected to conclude within four to six months.
The Evolution of the Indian IT Landscape: From Outsourcing to AI Orchestration
The acquisition of Encora by Coforge represents a pivotal shift in the global technology sector, marking the transition of Indian IT firms from traditional “back-office” service providers to high-value AI orchestrators. As the hype surrounding generative AI matures into enterprise-grade implementation, firms are no longer competing solely on cost-arbitrage; they are competing on technical sophistication and geographic proximity.
By integrating Encora’s specialized expertise in cloud and data engineering, Coforge is positioning itself to capture a significant share of the burgeoning AI revenue stream. This move mirrors a broader industry trend where legacy IT giants are utilizing massive capital reserves to acquire “pure-play” digital firms. This strategy allows them to bypass the slow process of organic skill development and immediately offer high-margin solutions like automated predictive analytics and custom LLM (Large Language Model) deployments.
Furthermore, the emphasis on Latin American talent underscores the rising importance of “nearshoring”. By securing a 3,100-strong workforce in similar time zones to the U.S. market, Coforge addresses a critical demand from North American clients for real-time collaboration on complex engineering projects. This acquisition is a clear signal that to remain competitive in the 2020s, IT service providers must blend global scale with specialized, localized AI intelligence.
