Tech services demand is changing, not weakening: Coforge CEO

In a recent discussion, Sudhir Singh, the CEO of Coforge, articulated a perspective that challenges the prevailing narrative about the technology services market. He argues that demand for technology services is not diminishing but rather transforming, fueled by emerging value pools. Singh emphasizes that companies that focus on proactive solutions, particularly those leveraging artificial intelligence (AI) for modernization and governance, will continue to thrive in this evolving landscape.

Singh's insights come at a time when the global technology sector faces various challenges, including slow decision-making from clients, geopolitical tensions, and uncertainties surrounding the impact of AI on the services industry. Despite these hurdles, Singh maintains that there is significant potential for growth, especially for firms that can adapt to the new demand dynamics. He points out that traditional labor-based service models are becoming less viable as businesses seek more innovative and efficient solutions.

The Shift in Demand Dynamics

According to Singh, there is a substantial opportunity for firms that can tap into the new value pools created by AI advancements. He notes that companies that continue to rely solely on traditional labor for service delivery will find their growth prospects limited. Instead, those that proactively engineer business outcomes will be well-positioned to capitalize on the changing landscape. Singh states, "From our vantage point, firms that are leading with proactive solutions and trying to engineer business outcomes will keep compounding and growing."

In the short term, Singh identifies modernization efforts powered by AI as a key area of opportunity. He anticipates that in the medium term, the focus will shift towards managing and governing AI models and agents working in tandem. This indicates a significant shift in how technology services are delivered, with an emphasis on integrating AI into business processes rather than simply automating existing tasks.

Singh also addresses concerns regarding competition from AI firms like Anthropic and OpenAI, which are entering the technology services space. He views these companies as specialists within a broader, robust market rather than direct threats to traditional IT service providers. Singh argues that enterprises are unlikely to commit to a single large language model (LLM) provider, suggesting that the market can accommodate multiple players, including those offering specialized consulting services.

Coforge's Strategic Approach

Coforge has reported impressive financial results, with a 136% increase in net profit and a 30% growth in revenue for the fourth quarter, largely attributed to AI-driven efficiencies. Singh attributes this success to the company's proactive approach in securing deals. Instead of relying on formal request-for-proposal processes, which often involve intense competition and pricing pressures, Coforge has focused on understanding client needs and delivering tailored solutions.

Singh highlights the importance of a specialized on-site team dedicated to studying clients and crafting solutions that prioritize business outcomes over technology itself. For instance, when working with a specialty insurer, Coforge presents solutions that streamline processes like the quote-to-bind time, demonstrating a clear understanding of the client's operational challenges.

In FY26, Coforge signed 21 large deals, with 20 sourced proactively rather than through competitive bidding. This strategy has allowed the company to maintain a strong pipeline of large deal wins, even amid industry concerns about slower deal ramp-ups. Singh is optimistic about the prospects for FY27, expecting further growth in large deal acquisitions.

On the topic of acquisitions, Singh emphasizes Coforge's contrarian approach, citing past buyouts of companies like Cigniti and Encora. He explains that the company prefers to integrate acquired businesses by placing its own leaders in charge from the outset, ensuring accountability and a seamless transition.

While Singh has ruled out investing in AI startups as a primary revenue strategy, he underscores Coforge's commitment to developing industry-specific solutions. This focus leverages the company's internal expertise, particularly in sectors like specialty insurance, to create tailored offerings that meet the unique needs of clients.

Why it matters

The insights shared by Sudhir Singh reflect a broader transformation in the technology services landscape, where adaptability and proactive engagement are becoming critical for success. For creators and technologists, this means that understanding client needs and leveraging AI effectively will be essential skills moving forward. As the market evolves, firms that can innovate and provide customized solutions will likely outperform those that cling to traditional service models.

Moreover, Singh's dismissal of the threat posed by AI firms entering the tech services space suggests that the market is large enough to support a diverse range of players, each offering unique value propositions. This could lead to increased collaboration and specialization within the industry, ultimately benefiting clients who seek tailored solutions to their challenges. As AI continues to reshape the technology landscape, the ability to navigate these changes will be crucial for both established firms and emerging players alike.