Venugopal Lambu is a man on a mission. The CEO designate of LTIMindtree has chalked out both a five-year and a 90-day plan to take the $4.3 billion software services player to the next level. The core objective is to win large deals. In a recent interview, Lambu said his ‘fit-for-future programme’ involves identifying project streams or initiatives to heighten the ease of doing business. Moreover, he would like the organisation to be agile and respond effectively to the fast-changing marketplace.
In fact, the merger—between L&T Infotech and Mindtree — which came through in late 2022, was aimed at creating a more agile organisation that would win big deals and hit revenues of $10 billion by 2030. The company was selling itself as a nimble challenger to the industry’s top-rung players with the proposition it could deliver the full range of clients’ demands. It was well-poised to be able to do this — the client bases were complimentary as were the business verticals and the service offerings.
The company’s performance in the current year, under the current CEO Debashish Chatterjee’s watch, has been been middling. Experts believe several factors — the integration pains, the
exit of some senior executives and an unfriendly macro-environment—stymied the firm’s performance. The company has lost more than a dozen 12 senior executives including Chief Financial Officer (CFO) Vinit Teredesai.
“If one takes a nuanced view, the end markets too have gone through their own cycles. The focus has been on cost-takeout deals as clients tried to optimise the existing tech spends. As a result, deals have been flattish over the last two years,” says an IT expert. Virtually no big billion dollar deals have come LTIMindtree’s way and deals of $500 million have been few and far between. In the nine months to December, 2024, the total contract value (TCV) went up by just 4% year-on-year due to modest wins in the first half of the year. However, the December, 2024 quarter saw a record TCV of $1.68 billion. This was well above the run rate of $1.3-1.4 billion seen in the previous 7-8 quarters and was driven by what analysts said were healthy new large deals and some that had been renewed.
“LTIMindtree won multiple large deals in the BFSI and manufacturing verticals and the deal pipeline remains strong with continued momentum in signings,” Kawaljit Saluja, Kotak Institutional Equities noted. In the September, 2024 quarter, for instance, company closed out a $200 million—from the manufacturing sector—in Q2FY25.
The company must try and sustain this momentum and strive for more. While LTIMindtree’s growth has slowed, partly because of the bigger base, its ebit (earnings before interest and tax) margins have also come under pressure.
In the nine quarters since December, 2022, LTIMindtree’s revenues have ranged between $1.5 billion and $1.14 billion, with the highest sequential growth at 2.8%.
The total number of clients added in a quarter, during this period, varied widely between 19 and 31. Worryingly, the number of clients billing over $100 million stayed at 2. As Pareekh Jain, Founder and CEO of EIIRT points out, “to be a successful large firm, you need to get large deals or secure a greater share of the wallet from customers. That’s where we expect the new CEO to focus, to get large deals,” Jain said.
For Lambu, who has done a three-year stint with the company previously as President leading the global markets transformation, the familiarity with the organisation is a plus. What experts value is his wealth of experience across Cognizant, Randstad Digital, HCLTech, and IBM. “He knows the BFSI and the high-technology clients well and that will come in handy,” says an industry insider. BFSI, incidentally, is the company’s biggest vertical fetching 36.4% of the total revenues.
Lambu has said he will capitalise on the generative AI and transition into an AI-first organisation. That is important. As Shivani Nagpaul, Technology Partner, Investment Banking, EY India, observes, the sourcing environment is going be determined by those players that can provide sweet deals which typically are the big boys because they have the wherewithal to do so. “Other than that, you need to be a specialist with a top-class offering. Also, sourcing will be led by solutions around GenAI,” Nagpaul says.
Others agree. “You need a high-end proposition else you will be left out,” says an industry watcher pointing out there has been a fair bit of vendor consolidation in the last few years.
For LTIMindtree, retaining people will be important. “IT is a people’s business and critical talent—practice leaders for instance—must be ring-fenced,” says an industry veteran. That should not be a challenge for Lambu but these are difficult times. As Nagpaul explains, the current environment is highly uncertain.
“The focus on in-sourcing by the US needs to be better understood,” she says, adding that 2025-26 will probably be a better year for the IT sector than 2024-25. At such a time, say experts, “cheaper, better and faster” is what customers will be looking for. So far, LTI Mindtree has been what experts describe as a “keep the lights on business”. Now it needs to up its game.
