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The merger between LTI and Mindtree happened a year and a half ago under the visionary leadership of A.M. Naik and S. N. Subrahmanyan (SNS). What was your role during that transition period, which was quite expedited and had to be completed within six months?
The vision for the merger was to bring these two companies together only when both were performing well independently. This was to ensure that neither had to lean on the other. By April 2022, both companies were experiencing profitable growth and were at the top of their performance. Given their similar sizes and complementary capabilities, it was crucial to integrate quickly to capitalise on cross-selling and upselling opportunities.
We formed a steering committee, and my primary role was to ensure a smooth and rapid merger. We could not start exchanging data until 14 November 2022, due to regulatory restrictions, but we had done significant groundwork in advance. This preparation allowed us to complete the merger by April 2023, within the six-month timeframe. The main focus was aligning the organisational structure, capabilities, and go-to-market strategy to function as a single entity.
The post-merger period has been tough to say the least. In fact, the pressures extended to everyone in the Indian IT sector. How do you view the past one and a half years since becoming a single company?
The post-merger scenario was indeed tough, but we knew the market conditions wouldn’t be the deciding factor for our merger. Over the last 18 months, market conditions have been challenging, with significant shifts in client behaviour. During the pandemic, clients focused on revenue generation through applications like direct-to-consumer and omnichannel solutions. However, in the last 18 months, the focus shifted to cost efficiency due to macroeconomic factors like rising interest rates.
Clients moved from discretionary spending to cost efficiency, and we had to adapt our capabilities accordingly. Historically, both LTI and Mindtree were strong in discretionary spending, but we reoriented our portfolios to balance efficiency and discretionary projects. Now, we confidently handle both areas.
Our performance in FY24 was strong, outpacing many tier-one competitors in growth and margins. While some smaller companies performed better, we navigated the merger without significant distractions and laid a solid foundation for the future.
You mentioned that FY24 focused on efficiency, but discretionary spending is still in play. Do you see any green shoots for FY25?
Green shoots could come from two main areas. First, discretionary spending, which happens when clients are confident of the returns, like the cloud investments during the pandemic. Second, consolidation, where clients reduce the number of partners to streamline portfolios and improve efficiency.
Currently, discretionary opportunities are not visible. Our growth in FY24 and now comes from efficiency and consolidation deals. Initially, these deals ramp up slowly due to transitions and potential rebadging, which delays revenue realisation.
In our Q3 and Q4 commentary last fiscal, we noted delayed ramp-ups and decision-making. Now, those ramp-ups are completed, and new ones are starting, indicating green shoots for Q1 and Q2. However, unlike before, clients no longer have a full-year budget view, making it hard to predict discretionary spending. In summary, green shoots are visible in cost efficiency, not discretionary spending. Additionally, Generative AI (GenAI) is gaining traction, presenting cost-saving opportunities that benefit us.
With the absence of discretionary spending, won’t growth slow down? You’ve set a $10-billion mission for 2030—is that deferred?
We didn’t specify a specific timeline for becoming a $10-billion organisation. It’s our aspiration, essential for guiding our goals and leadership. This ambition remains, combining organic and inorganic growth. Post-merger, our capacity for inorganic growth has increased. We now have more cash on our balance sheet, enabling us to pursue larger M&As. While we used to consider smaller acquisitions, we can now undertake significant ones if the opportunity is right.
However, we won’t acquire just for the sake of it. We are open to M&As when strategically beneficial. Our enhanced ability to integrate acquisitions puts us on strong footing for future growth.
How is LTIMindtree adapting to the GenAI revolution since 2022?
We have developed a platform, Canvas.ai, to absorb and innovate with these new technologies. GenAI offers three main benefits: efficiency, revenue enhancement, and productivity in engineering. For example, using GenAI for code conversions and QA can significantly reduce the time needed for migrating workloads to the cloud.
Currently, most GenAI use cases are focused on efficiency. We have over 150 use cases, many already in production. While revenue-generating applications of GenAI will emerge over time, the current focus is on becoming more efficient. During the pandemic, the emphasis was on revenue through direct-to-consumer and omnichannel strategies.
Similarly, GenAI will eventually contribute to revenue, but for now, it’s primarily enhancing efficiency. Opportunities for revenue generation with GenAI exist and will be discovered through collaboration between clients and us.
The industry and media are abuzz with the question: What’s next for DC and leadership at LTIMindtree? Is there succession planning in the works?
I have not gone anywhere. I’m still here and I’m continuing to be here. And if you talk about succession planning for an organisation of our size, a $4 billion+ organisation, it’s basic risk management and governance issue if you don’t have a plan laid out or if you don’t think about it. Beyond that, I think I am also reading some of these things. Some of them are news to me as well.
Some analysts have suggested that top-level attrition at LTIMindtree is impacting performance. What is your perspective on this issue?
I don’t see attrition as directly linked to the merger anymore; it’s business as usual for us. With the merger, we’ve gained significant leadership bandwidth from both LTI and Mindtree. Attrition is something we manage routinely—backfilling roles as needed and proactively preventing it where possible. However, I wouldn’t attribute it to our top-line performance. Despite challenging conditions, we’ve outperformed many tier-one companies recently. Our foundation is solid with the right leadership and a strong second line. We’re well-equipped to balance both discretionary and cost-efficiency needs, ready to compete robustly in the marketplace against any competitor, big or small.
With the merger behind you, what is the vision for LTIMindtree?
Our vision moving forward is anchored in our ambition to achieve the $10 billion revenue milestone. The strategic direction aligns closely with the group’s goal to enhance our service-focused approach, integrating LTIMindtree into an agile, asset-light framework. LTI’s merger with Mindtree and subsequent integration was driven by this vision to reinforce our position in the services industry.
Looking ahead, we have a clear strategy mapped out for the short to medium term. This strategy spotlights industry focus, service line expansion, and the development of additional capabilities. A significant opportunity lies in leveraging our extensive client base of over 700 clients, where we aim to maximise synergies and enhance value through cross-selling and upselling initiatives.
