We are already seeing green shoots; FY25 will be a better year: LTIMindtree
Sudhir Chaturvedi, president and executive board member, LTIMindtree
For IT services major LTIMindtree, Financial Year 2025 has started on a positive note, with close to 60 per cent of its revenue showing positive traction.
Sudhir Chaturvedi, president and executive board member, LTIMindtree said that the demand environment, at present, was much better than what it was at the beginning of the year.
“If you ask me, where we are now versus January, then I would say it is a much better space. There are clear green shoots. FY25 will be better than last year,” Chaturvedi told Business Standard.
Chaturvedi, who spearheads the sales initiative at the fifth largest IT firm across geographies and verticals, is confident of the shift in demand cycle as he has met over 170 clients in the last three months to gauge the spend sentiment.
“What is also making the needle move is that last year clients were in a wait and watch mode to see if the macro improves. But now clients are at a stage where they have accepted that the macro is going to remain similar for an extended period and hence they are prioritising the areas where they need to make investments,” explains Chaturvedi.
What is driving this spending include digital transformation and data and core transformation, which started off post pandemic, but a significant part of the spend is in artificial intelligence (AI).
“About 85 per cent of clients have said that AI is the top priority area to address and focus. When it comes to verticals we are seeing strong traction is the BFSI and hi-tech. BFSI for us is 38 per cent in revenue and technology and services which is hi-tech is essentially about 20-22 per cent. At present 60 per cent of our revenue is seeing good traction in the market and therefore we believe that there are more than green shoots,” added Chaturvedi.
This will be of significance for the company as BFSI in Q4 FY24 was down 6.6 per cent year on year.
When it comes to GenAI work, LTIMindtree has over 140 projects in production in this category.
“For LTIMindtree AI has three focuses. First is AI in everything, this means every service and vertical has AI embedded. Two, AI is for everyone. And finally, everything for AI. This means that every deal from LTIMindtree will be AI proficient,” he added.
Chaturvedi also added that discretionary spending, which has been stressed, is making a comeback in select areas.
“Areas such as customer experience, new revenue generation and a lot of investments in the market tech stack are back. This is also one of the biggest AI use cases. But cost takeout deals still constitute 70 per cent of the large deals pipeline,” he added.
When asked if the merger has achieved its aim of getting access to large deals in a market that has been growing at a slower pace, Chaturvedi shares that the merger has created a company that is emerging as a real competitor to the larger peers.
He points to the $5.6 billion large deal pipeline that the company had at the end of FY24, up 15.7 per cent year on year. Of this almost 48 per cent represent net new logos.
“Our average deal size is about $65 million. We have, post merger, seen a big uptick in the large deal pipeline. We are seeing a slightly different market in the larger deal pipeline segment due to our new found scale with 85,000 employees. Clients see us as the best alternatives to some of the larger players. One data point that I can share is that LTIMIndtree at present has over 80 master service agreements (MSAs). Significance of MSA is that it gives you a license to hunt against the incumbents and in new spends areas across the board. That is very significant,” he explains.
He also added that going ahead the company will also be getting back to its campus hiring, as the company has also managed to hit a high utilization of 86.9 per cent so far.
For Chaturvedi, the one deal that has been most challenging and fulfilling is the partnership with Saudi Arabia’ Aramco.
“It has taken two years of my efforts and competition with 20 large players to get this partnership. This is part of the ambitious plan of the Kingdom’s Vision 2030. We expect that by 2030 the overall tech spends to actually go up by 2.5 times. The rough estimate that they expect the tech spends to touch is $112billion or so,” said Chaturvedi.
In March this year LTIMindtree entered into a joint venture with Aramco Digital, the digital and technology subsidiary of Aramco. The JV will be incorporated by the end of July.
First Published: Jun 25 2024 | 8:55 PM IST