LTIMindtree, formed after the merger of L&T Infotech (LTI) and Mindtree, reported its first quarterly earnings as a combined entity on Friday, with a $1 billion quarterly revenue run rate and a robust order inflow of $1.25 billion. Debashis Chatterjee, CEO and managing director of LTIMindtree, talks about the demand environment, growth strategy, and mergers and acquisitions (M&A) strategy, in an interview with Ayushman Baruah. Edited excerpts.
How do you see the overall demand environment in Q4 and in the next few quarters?
I think as far as Q4 is concerned, some of the aspects we saw in Q3, like it being a seasonally weak quarter with furloughs and lower number of working days, will go away. As far as quarters beyond Q4 are concerned, we see a bit of caution among some of our clients where there is little delayed decision-making in terms of taking a decision to award the deal or when to start the project. But the good news is, we never came across a situation where clients are cancelling their programmes. Instead, we are seeing clients beginning to talk about cost takeout deals to build efficiencies. Such cost takeout deals tend to be slightly longer ranging between five-six years, where you commit to certain efficiencies over a period of time. Digital is driving two sides of the same coin. One is you take some cost out, and by taking the cost out, you can continue to fund your digital transformation.
As a combined entity now, how do you plan to capitalise on the individual strengths of LTI and Mindtree?
We have over 720 clients now across the two entities where we can cross-sell and upsell because the overlaps are very minimal. The capabilities of the erstwhile LTI had a lot of engineering DNA, whereas Mindtree had a lot of experience DNA. Combining the engineering and experience DNAs, we can provide end-to-end solutions for clients all the way from core to experience to edge as we call it. And the other important thing is that as a combined entity, we are servicing almost one-fifth of the Global Fortune 500 list, which means we have very good logos within the portfolio.
Do you see yourself in a better position to win more large deals now?
The large deals have two aspects. First is, say if tomorrow there is a large deal that is being announced in the market, we need to have the alertness within our sales teams to ensure that we get a seat at the table. We are very confident that we will get a seat at the table given our size, scale, and capabilities. The second aspect is, many of the large deals are not necessarily reactive, but they are more proactive, which means they are shaped with your existing clients. And that is where we are very confident. Given the capabilities we have, we should be able to shape a lot of large deals as we go along. That is also something we are focused on as we go along.
Do you expect more organisational change in terms of restructuring of leadership team, etc.?
As a combined entity, we have already done all these changes. And, when we made all these changes, the factor we looked at is that we wanted minimal disruption at the client portfolio. We wanted to ensure that the client should not really worry about what was happening in the organisation. The client should only see the best of the organisation which is our capabilities. Keeping that in mind, we have already done the organisational changes and given that we have a significant leadership bandwidth within the two organisations combined, I think we are very well geared to address the market opportunities as a combined entity.
Will you be open to M&As going forward?
At this point in time, our strategy exercise is under way and we are charting out the long-term plan for the company. So, probably I will be able to share more details in the next two quarters. But inorganic growth is definitely an important part of our plan. We would never do an acquisition just for the sake of scale because we know how to generate scale. We will always focus on inorganic growth to get access to capabilities or geographies which will help us in accelerating the scale journey that we are embarking on.