Some discretionary spend may return for high-tech sector: LTIMindtree chief

In a Q&A, Debashis Chatterjee, CEO & MD of the firm, talks about the reasons for its subdued growth, deals pipeline, and acquisitions strategy

LTIMindtree’s dollar revenue for Q1 stood at $1.05 billion, up 8.2 per cent in constant currency from the previous year but flat sequentially, as deal closures were delayed amid clients turning cautious in the face of the macro-economic uncertainties. Debashis Chatterjee, CEO & MD, LTIMindtree, talks about the reasons for subdued growth, deals pipeline, and acquisitions strategy, in an interview with Ayushman Baruah. Edited excerpts:  

What was the reason for LTIMindtree reporting flat revenue sequentially?  

There was a concern that we called out in the previous quarter itself that we are seeing some delays in onboarding some of our BFSI clients. That continued through Q1 and that is where we got a little impacted. Secondly, if you look at Q4 from a seasonality standpoint, apart from services revenues, there were some license revenues as well. So, if we just leave out the license revenues, we are talking about almost a 0.9 per cent QoQ growth. Also, we were expecting a few deal closures in Q1 which got shifted. Apart from these factors, Q1 was not very different from what we had expected.

How do you see client spending in the next few quarters?

This is what I call paradoxical times, because on one hand, the demand pipeline and deal activities are pretty strong. If you look at the high-tech industry, it typically starts from July to June. So, I am hoping that as we get into this fiscal, some of the discretionary spending may come back.  Some of the delays that we had in terms of decision making also may come back. So, the demand is not a concern for us but the delay in decision making. So, there is a certain amount of cautiousness among clients across industries in terms of decision making.

Now that you are a much larger entity, what is your strategy to mine large deals?

We are in a better position to mine the large deals as and when they happen. But what we also called out is that we should be in a position to cross sell and upsell into our strategic accounts. If you look at our top 10 or top 20 clients, there has been a growth in that segment which means that the cross selling and upselling is working well. We have also won some large deals in some of the consolidation opportunities we are participating in. We have won some of these deals and we are well-positioned in some others. I cannot share more details but can tell you that the confidence we have in terms of the combined entity is very strong. So as and when large deals happen, we feel that we will definitely have a very good shot in terms of winning some of those.  

Can we expect to see some acquisitions this fiscal?  

Acquisitions are always something that we look at but we will never do the acquisition unless it is a right fit. We have a very specific criteria when we look at an acquisition. We will never do an acquisition just for the scale. It has to be really aligned to our overall strategy. It has to be either with respect to some specific industries or capabilities or geographic expansion and we are continuously looking at that. This is definitely one of our priorities which we are continuously working on but till we get the right target, we will not go ahead.