Coforge Lands $1.56 Billion Contract with Sabre
Coforge, a digital solutions provider, announced on Tuesday that it had secured a substantial 13-year contract valued at $1.56 billion with Sabre Corp., a US-based travel technology firm headquartered in Southlake, Texas. The deal underscores a significant achievement for the Noida-based IT services company.
As part of the agreement, Coforge will oversee software product delivery for Sabre and will also take on artificial intelligence-led tasks for the travel technology company. This strategic move is expected to solidify Coforge’s position in the market and enhance its service offerings.
Deal Details and Implications
The financial magnitude of the deal suggests that Coforge will receive an average of $120 million annually from Sabre. This makes it the largest contract in Coforge’s history. Furthermore, this accomplishment is notable because mid-cap IT companies rarely secure contracts of this size, particularly those that exceed $1 billion.
Sudhir Singh, the chief executive of Coforge, highlighted the shared characteristics between the two companies, stating, “Both Sabre and Coforge share a similar DNA as technology firms with a strong focus on cutting-edge engineering solutions, customers and the travel industry.”
Impact on Revenue and Market Position
Coforge is anticipating a substantial increase in revenue as a result of this agreement. The company previously derived nearly one-fifth, or $201 million, of its fiscal year 2024 revenue of $1.12 billion, from clients in the travel, transportation, and hospitality sectors. With this new deal, its revenue from this sector is projected to rise by 60%.
The company’s largest market, the Americas, accounted for about 48%, or $537 million of its revenue as of March 2024. This deal is expected to further boost revenue from that region.
An analyst based in Mumbai, speaking on condition of anonymity, commented, “This is Coforge’s largest deal. It tells you that some of these mid-cap guys are able to carve out large transactions and convince customers to give them business as against the larger players.” The analyst also suggested that Coforge might have taken over part of Sabre’s workforce as part of the deal.
Corporate Strategy and Recent Acquisitions
The importance of mega deals is significant for IT companies, as they provide a guaranteed stream of annual revenue. In line with its growth strategy, Coforge completed the acquisition of Cigniti, a software testing services firm, in December last year. This acquisition, its largest to date, contributed to a 40.8% year-on-year increase in its October-December 2024 revenue to $397 million.
The company paid $220 million for a 54% stake in Cigniti. This acquisition, which was expected to expand Coforge’s reach by establishing new verticals in retail, hi-tech, and healthcare, is playing a role in the company’s growth. Coforge, after entering the $1-billion revenue club last year, now targets achieving $2 billion in sales by fiscal year 2027.
Leadership and Company Background
Notably, Coforge has experienced leadership stability, with Sudhir Singh, a former executive at Infosys, at the helm since May 2017. He is among the longest-serving chief executives amongst the country’s top IT outsourcing companies.
Coforge, which was originally launched as NIIT Technologies in 2004, was acquired by Baring Private Equity in 2019 and is now entirely publicly owned, boasting a market capitalization of ₹48,176.05 crore.
