LTIMindtree wants to spur its short-cycle growth by augmenting bench strength and pushing forward its Ebit (earnings before interest and taxes) target by three-four quarters.
Sudhir Chaturvedi, president and executive board member, LTIMindtree, told FE in an interaction that the company is already capitalising on every large deal growth opportunity the market offers. “But there are short-cycle opportunities in the market, which require a rapid response (for people to be staffed on a project). For that to happen, we need to have a bigger bench than we have.”
LTIMindtree’s utilisation rate is currently over 87%, which Chaturvedi said the firm needs to bring down for short-cycle growth.
“We’re going to invest in creating the right bench… for example in data and GenAI. These are areas where there is still good demand. Our ERP (enterprise resource planning) business is also starting to do very well and we want to create capacity there, which is why we said we will focus on this and push forward the Ebit target by a few quarters. Margins will come back through growth.”
Chaturvedi said the company prefers to operate “in the 85% range”, which would be a healthy utilisation and ensure capacity to capture short-cycle growth. Speaking about visibility in Q4, he said, “The furloughs in Q3 were deeper — they carried on for a longer period of time. And some of the furloughs are continuing in Q4 as well, because clients are cautious in this environment.”
This fiscal, the company saw furloughs even among clients whose businesses are not seasonal in nature. “It appears like it has become an industry practice.”
The extended furloughs are in line with Q3 and the focus is to convert the pipeline to revenue, he said. “We invest in our client relationship also. If clients are having difficult time, we build a longer term relationship with them. People always remember the help (they got) when they were in need. Our customer satisfaction is very high and we are very proud of that.”
On the deals front, Chaturvedi said LTIMindtree has deals of three, five and seven years. “So from a mid- to long-term growth perspective, we are laying a very strong foundation.” This is the third quarter in a row where LTIMindtree bagged an order book that is 1.3 or 1.4 times of its revenue.
