Though Coforge, the mid-tier IT firm, has not given an annual guidance for FY25, sees the order executable value as the surrogate for growth, according to CEO Sudhir Singh.

The acquisition of Cigniti Technologies, which has made the market apprehensive, is expected to be a “game changer” for the company. 

Coforge’s fresh order intake more than doubled on a year-on-year basis to $774 million from $301 million, as a $400 million deal was signed during the quarter.

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“For seven years our order executable number that we called out is very strongly correlated with the actual revenue and we give that number four times in a year. So we’ve said that please use that number as the surrogate for growth. We are starting now with a 17.3 per cent higher order executable number and therefore the growth, that correlation will continue on a go forward basis as well,” Singh told businessline

The demand environment going forward is expected to be positive. Singh noted that there is reasonably good predictability and Coforge is seeing clear green shoots on demand. It is seeing upside in its core vertical of travel, as airlines and airports are actively spending on the one order one industry initiative, and airports are trying to recreate themselves as digital malls. 

Further given the geopolitical uncertainty, speciality insurance is seeing increase in volumes, resulting in technology spend. “We don’t see FY25 as necessarily all doom and gloom. There are very clear green shoots around demand,” the CEO said. 

Coforge’s margins in Q4 fell below estimates, the company has provided an outlook for improvement of 50 basis points going forward. Singh notes,

“Our margins were lower because we rolled out increments on time on April 1 last year. The drop seen is also equal to the SGNA number, which has gone into sales solutioning and pre-sales, which is why when the rest of the industry sounds very tepid about future growth, I talk with conviction about it.” 

The company also announced the acquisition of 54 per cent stake in Cigniti Technologies, which has sparked apprehensions over execution risk. However, Singh believes the acquisition will be a “game changer” for the company. Singh noted that the merged entity will create three new verticals in retail, healthcare and hi-tech, where retail will be $100 million, high tech and healthcare will be $50 million each.

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Further, given Coforge only gets 48 per cent of its revenue from North America, and Cigniti is a North America client focused firm, which gets most of its revenues from the west, midwest and southwest, it will help close the gap areas from a geo perspective. 

He also added, “The proliferation of AI means that the complexity, and therefore the opportunity around assurance services is growing. We believe that there is need to address the issues around model validation, model performance testing, output validation to prevent AI hallucinations that have to be in play on a go forward basis. Cigniti focuses on the non functional testing area on performance on Security led by automation and we believe it will allow us to create another new service line as an assurance services for AI on a go forward basis.” 

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