Coforge bets on applied AI, says next phase won't be won by access to LLMs

IT services company Coforge believes the next phase of artificial intelligence adoption will be driven by enterprise applications rather than access to large language models, as businesses shift their focus from experimenting with AI to deploying it at scale across their operations.

Speaking during the Coforge's June-quarter earnings call, Chief Executive Officer Sudhir Singh said the AI conversation has fundamentally changed over the last year. Enterprises are no longer asking how to deploy AI, but how to operationalise, govern and scale it to generate measurable business outcomes.

"We believe this next phase of AI will not be won through access to models. Every enterprise will have models. Every enterprise will have clouds. Every enterprise will have agents. The differentiator will be applied AI," Singh said. He described this transition as a move towards "enterprise autonomy", where AI is embedded into business workflows, decisions and operating models rather than deployed as standalone tools.

Singh said enterprises are increasingly avoiding dependence on a single model provider or cloud platform, instead building what he termed "enterprise sovereign AI" and "open intelligence" architectures. He added that Coforge's AI platform, Nuuron, has been designed to help clients move from AI pilots to enterprise-scale deployment. During the quarter, AI-led engineering, data and cloud services contributed 86% of consolidated revenue, while nearly 30% of active delivery engagements already leveraged AI within workflows.

Expects record large deal signings in Q2

The company's confidence in the AI opportunity is also reflected in its deal pipeline.

Singh said Coforge expects to sign one of its strongest quarters for large deals in the July-September period, with the number of deal wins likely to come close to what the company signed during an entire financial year three years ago.

"We believe that we are likely to sign large deals in numbers that will be very close to what we signed in the full year just three years back," he said, adding that several large deals had already been signed during the first month of the quarter. While most of these deals are expected to begin contributing to revenue from the third quarter onwards, management still expects "very robust" growth in the September quarter.

The company also clarified that the $691 million order intake reported for the June quarter excludes business from recently acquired Encora as well as potential work under certain UK framework agreements.

Also read: Coforge shares jump over 6% after Q1 organic growth at 1.1%, Encora deal contributes

Q1 performance

Coforge's June-quarter results marked the first full reporting period to include the consolidation of Encora Holdings, making sequential and year-on-year comparisons not strictly like-for-like.

The company reported dollar revenue of $592.2 million, up 21.1% sequentially, while revenue in rupee terms rose 24.2% to ₹5,527.7 crore. Net profit declined 15.3% from the March quarter to ₹518.6 crore, as acquisition and integration expenses related to Encora, legal costs and provisions against customer receivables offset operational gains.

Despite these one-offs, Coforge reported an EBIT margin of 16%, ahead of its full-year consolidated guidance of 15.5%. Organic constant currency growth stood at 1.1% during the quarter, but excluding the planned exit of a $15 million India government portfolio and a $4 million data centre business, growth would have been 5.2%.

The company ended the quarter with $691 million in order intake and a record executable order book of $2.23 billion for the next 12 months. It also declared an interim dividend of ₹4 per share, with August 3, 2026, fixed as the record date.

Shares of Coforge settled 1.25% higher at ₹1,707 apiece on the Stock Exchange (NSE) on Wednesday (July 29).