With the exit of promoter-investor firm, Baring PE, from Coforge, and the company’s board having no promoter in it, Coforge has emerged as the only board-governed professionally-run Indian IT service firm. The company is now aiming to set a benchmark around governance and be a role model for others.

Speaking to FE, Sudhir Singh, CEO, Coforge, said, “Baring, which was the promoter of the firm, has sold its entire stake over the course of the last three months. Consequently, Coforge has emerged as the only material board-governed professionally-run Indian IT services firm in the industry.”

The exit of promoter-investor firm, Baring PE, from Coforge in the second quarter also triggered extra employee stock options (ESOPs) costs for the midcap IT firm, eventually bringing down its net profit by 10% year-on-year.

Singh said that these ESOPs were milestone-based and the company had to shell these out at the time of Baring’s exit in August.

Coforge’s net profit grew 9.5% quarter-on-quarter (q-o-q) to Rs 181 crore in Q2FY24, from Rs 165 crore. The cost of ESOPs was around Rs 51.9 crore in the second quarter.

On having no promoter on the company’s board, Singh said, “Baring, which was the promoter of the firm, has sold its entire stake over the course of the last three months. Consequently, Coforge has emerged as the only material board-governed professionally-run Indian IT services firm in the industry.”

He added, “We believe that as the Indian IT services industry matures, this ownership construct of professionally-run firms will likely increase and we take our responsibility as being the first professionally-run firm very seriously. We will ensure that we set a benchmark around governance and performance that will do justice to the trust that the investors have placed in us.”

He added that the rise in other cost was due to the interest cost, because Coforge also affected a 20% payout for the SLK Global acquisition, which it had done two years back.

He said by FY24-end, the firm will see profitability back to where it was. “Our confidence comes from the fact that at the end of H1, we are growing 16.2% in CC terms. Our guidance is 13-16% growth for the year.”

“We’ve actually built in a bit of a buffer in terms of the guidance given the tough macro environment that exists across, but guidance is coming from what we’ve already done in the past,”Singh said.

He further elaborated that it’s not an aggressive guidance. “It’s not a guidance where we are saying we have a lot more to do. We’re already growing 16.2%.”

On attrition, Singh said that arbitration attrition is down to 13% now and he expects it to continue to fall to 11-12% over the next two quarters.

Coforge’s utilisation is at 80% and it includes freshers. The IT company hopes to marginally improve it to 81%. In the first quarter the utilisation ratio was at 81% and it fell to 80% in the second quarter because the company hired a lot of freshers, added Singh.