Coforge accelerates its BFSI focus through SLK Global acquisition

Major business pivots have been the talk of the last year, be it BrewDog shutting down their brewery to produce hand sanitizer or the local barbers offering virtual hairdressing lessons – the pandemic has forced every savvy enterprise to rethink their business model. Among them was Coforge, who notably rebranded from NIIT Technologies in 2020, and entered the pandemic with almost 30% of their total revenue coming from the transport industry. But as we all know, that’s an industry that was virtually ground to a halt thanks to the outbreak of Covid-19, and it continues to operate at a reduced capacity. For Coforge, it led to their post-pandemic pivot, which saw them reduce their reliance on the transport industry and increase their focus instead on a core areas within banking, financial services and insurance (BFSI) supported by its recent acquisition of SLK Global.

Coforge has a rich history in the transport industry, and it’s contributed a significant portion of their revenue for several years – until the pandemic

Historically transportation has been one of Coforge’s leading focus areas, and it’s a sector they have invested heavily, in fact, in our 2020 Travel, Hospitality and Logistics Top 10 we even called out their deep industry expertise in the space. The provider boasts a range of solutions, particularly around the airline industry, including Monalisa, their smart airline solution suite that helps clients with the likes of compliance, revenue accounting and flight operations. Alongside this, Coforge supplements their own offerings with an extensive partnership ecosystem that includes the likes of Sabre and GE Aviation Digital – both of which focus solely on the travel and transportation industry themselves.

Exhibit 1: Coforge reduced their reliance on transportation in 2020

Source: HFS estimates and Coforge earnings reports, 2021

However, thanks to the outbreak of Covid-19 the airline industry, as well as the wider transportation sector, was effectively ground to a halt – and Coforge recognized that they needed to pivot if they hoped to thrive in the post-pandemic economy. If we look at Exhibit 1, we can see that in 2019 Transportation contributed 27% of the Coforge’s total revenue, whereas in 2020 it shrunk to 21%,

Coforge is betting big on BFSI, and we connected with their leadership to understand exactly how they planned on doing it

The BFSI sector is hindered by complex regulations and years of technical and process debt – which means it’s not an easy market to penetrate. Luckily for Coforge, they already have a good amount of experience and success in the space, as BFSI contributes almost half of its total revenue. You can see it for yourself if you look back to Exhibit 1. Coforge’s leadership team told us that they had enjoyed great success in capital markets, in particular. But they went on to explain that further investment is needed to really accelerate their growth in the space. For example, they had recently been expanding into public sector financial services and central banking, something they believe was helped by their digital capabilities.

However, for their BFS business, the biggest recent investment comes in the form of their acquisition of SLK Global, a business process transformation firm which specializes in financial services. The SLK acquisition brings with it approximately 7,000 resources across India and the Philippines, as well as an onshore location in Texas. It will help Coforge add deep mortgage processing capabilities, as well as capabilities in cards and payments, and even a selection of property and casualty insurance domain capabilities.

While the SLK acquisition offers exciting growth opportunities, Coforge emphasizes that their existing reputation in the space has also been a key driver for growth. The provider’s ability to focus on enterprise realities resonates well in the market, and it has helped them nurture strong relationships with their clients. Coforge’s leadership told us that they are leveraging these relationships to cross-sell and up-sell to their existing insurance, banking and wealth and asset management clientele. This will see Coforge focus heavily on helping its BFSI clients modernize and grow their technology landscapes, whereas they had traditional focused mostly on maintenance.

The Bottom Line: Coforge’s post-pandemic pivot sees them bet big on BFSI, and they have already made a number of strategic investments to drive growth in the space.

Coforge recognized very early in the pandemic that their heavy reliance on the transportation industry could expose them to significant risk, as the industry was effectively ground to a halt. Their post-pandemic pivot sees them heavily in growing their BFSI business – and the fact that they continued to post double-digit year-over-year revenue growth throughout 2020 proves that the strategy paid off. It’s going to be interesting to watch Coforge as we move beyond the pandemic and in to the ‘have-to-have’ economy, as they continue to invest in and grow their BFSI business.