Coforge to spin off public sector as separate vertical

livemint.com:

Coforge, the mid-sized IT services company which achieved over $1 billion in annual revenue in the last quarter of FY23, is planning to spin off a stand-alone public sector division by the year-end. The sector’s resilience is a catalyst for this strategic focus on establishing a separate public sector entity, Sudhir Singh, the chief executive, said in an interview. “We are focusing on public sector clients outside India—in the UK and Australia.

Public sector accounts for 7-8% of our global revenue, so the plan is to diversify it as a standalone vertical. Public sector is a very resilient category, with governments increasingly taking up tech due to the entire focus on tech adoption to ensure the benefits reach end-consumers fast and social welfare schemes are more equitable. Spendings are increasing and they do not fluctuate like spending by the corporates.

This vertical can grow faster than spending of other verticals," he said. Coforge owns three core business verticals—banking and financial services (BFS), insurance, and travel, transportation and hospitality (TTH). On 19 October, Coforge had reported revenues of $278.1 million for September quarter, up 2.3% sequentially in constant currency terms.

Its gross margin grew 160 basis points (bps) to 17.6%, and is expected to expand even further, Singh said. “At the start of the year, it was clear that macroeconomic situation was tough. Tightening of client spending started happening about a year ago.

When we completed our budgeting around February, we knew this will be a tough year. We will meet our margin guidance for the year. The margin expanded by 160bps in Q2—in the December quarter, which is shorter in terms of number of billable work days, we are expecting margin