DQ Top 20 Rank 10 - LTIMindtree Trying the ‘One Plus One is Eleven’ Formula 

A few months are too soon to tell whether the welding of two strong IT names has worked the expected wonders or not. But the iron has been hot and attacked well—as per the latest report card of LTIMindtree. Especially on the parts of blue-chip deals and big transformation projects. 

After the merger of L&T Infotech and Mindtree in November 2022, the company calls itself a new kind of technology consulting firm and is a digital transformation partner to more than 700 clients. 

Although LTIMindtree began operations only in the middle of Q3FY23, the company says it is encouraged by early indications that the merger rationale is playing out as expected. It has started operating under a unified system and processes since the 1st of April 2023, establishing the base for realizing the envisioned synergies for the merger. The company reported FY23 results with Y-o-Y revenue growth of 19.9 percent in constant currency and 17.2 percent in US dollar terms. The growth, as explained by the company, was broad-based (and marked by solid performance across all verticals and geographies). 

Industry watchers point out how the complimentary service line expertise of LTI and Mindtree can generate revenue synergies through cross-sell/up-sell opportunities across existing clients. 

A good way to gauge the combined strengths of erstwhile behemoths LTI and Mindtree is to see how many clients shine in this report card. The company added 31 new clients for Q4 and increased its count of US$50 million plus customers by 2 to 13. Its order inflow for the quarter came in at US$1.35 billion, helping it close the full-year order inflow at a very strong US$ 4.87 billion. 

It also etched its strength deeply in its largest vertical, BFSI (Banking, Financial Services, Insurance), which grew at 23 percent Y-o-Y in US dollar terms in FY23. This is notable – given the challenging macro environment. High-Tech, Media, and Entertainment, its second-largest vertical hit US$1 billion in revenues for FY23, growing 14.5 percent—as shared by the company. 

As per other data available, there were 728 active clients as of March 31, 2023. Interestingly, the US$1 million+ clients went up by 56, a total 383 (increased by 9 in Q4). As to US$10 million+ clients, this bracket increased by 5, a total 81 (no change in Q4). The US$50 million+ client club showed a rise of 3, a total 13 (increased by 2 in Q4). 

Key Wins 

• Bagged a multi-million dollar cost transformation work for Currys, a UK-based retailer of technology products and services 

• Chosen by Onsemi, a global leader in intelligent power and image-sensing technologies for enterprise IT work 

• Selected by Hellenic Bank, a leading financial institution in Europe for digital transformation work 

• Picked by a North American manufacturer of high-performance building solutions for digital transformation 

• Won a multi-year, multi-million-dollar deal with a financial insurance company for application and data services 

• Chosen by one of the largest property and casualty insurance companies in the United States for independent testing 

• Grabbed an application maintenance deal from one of the major airlines in the United States 

• Won a multi-year AMS deal from an American insurance company 

Its senior leadership points towards a move to unified systems and processes, and the continuation of exploiting the synergies. Client requirements seem to have changed over the last quarter, and its top brass says that it is now meeting the new requirements to deliver cost savings—especially directed to fund in-flight transformation programs. Industry watchers point out how the complimentary service line expertise of LTI and Mindtree can generate revenue synergies through cross-sell/up-sell opportunities across existing clients. 374 client accounts of more than US$1 million in revenue size. The combined entity LTIMindtree has higher large deal opportunities. And it is tapping the potential to a reasonably impressive degree. 

This year the company has leveraged its transformation expertise well with big deals in application and transformation projects – for many US and European firms. It is expanding its footprint in these regions. This year it began a new delivery center in Krakow, Poland, as part of its strategy to expand its presence in Eastern Europe. Europe is a strategic spot for the company—with about 75 clients. This center could complement its existing Warsaw delivery center, and bring it closer to its customers in the travel, transportation, and hospitality industries. In 2022 it dropped another anchor in the USA region too with a center in Hartford, CT. Towards the end of 2022, it also bolstered its India strength with a Digital Experience Centre in Hyderabad—that followed the announcement of a satellite center in Kolkata. 

If we look at the company’s performance further from a geographical lens, North America continues to be its strongest market, registering a Y-o-Y growth of 21.5 percent in FY23. The company’s business in this significant region has attained a substantial scale accruing an annual revenue of US$3 billion. For the full year, Europe grew at 14.1 percent Y-o-Y in constant currency, but due to foreign exchange impact, reported growth in this geography was 3.9 percent in US  dollar terms. 

What’s Next 

When asked about the key opportunities ahead, the company has shared that—‘Our expanded and diversified capabilities combined with enhanced scale are creating significant cross-sell and upsell opportunities, cementing our partnership status as an industry leader with our existing clients. We are now a formidable contender for strategic partnerships with new clients through multi-year and multi-tower deals.’ 

It explains how its unique position as LTIMindtree provides opportunities to bend the cost curve through various levers, steer efficiencies in operational transformation and drive incremental revenue. ‘This, coupled with cross-sell and up-sell opportunities as well as concentrated mining efforts will enable our profitable growth’, the company added. 

There are a couple of challenges punctuating this sunny outlook though. As a result of the macro uncertainties, the company sees a cautious approach toward technology spending, in general. ‘That said, clients’ focus on leveraging technology for enhanced competitiveness remains intact. Their goals hold a significant long-term upside for our full-stack, end-to-end capabilities. We are already seeing a growing trend of deals where savings from efficiencies are being used to fund in-flight transformation projects.’ It observes. It also believes that Generative AI will create the next phase of the autonomous enterprise. 

Debashis Chatterjee, Chief Executive Officer and Managing Director at LTIMindtree. 

“Our performance through the full year 2023 speaks to our steadfast client focus despite significant global uncertainties, macroeconomic challenges, and our merger integration to form a robust whole as LTIMindtree. Clients across sectors have expressed keen interest in our unique core-to-edge-to-experience value proposition. The demand to remain future-ready has accelerated technology-led innovation, which holds significant long-term upside for our full-stack offerings and cross-industry exposure, boosting our endeavor to deliver industry-leading revenue growth in the future as well.” 

Among other things, LITMindtree is building hot-in-demand capabilities by forging ties with other strong specialists. Like a solution created specifically for the insurance vertical. The company did this by joining hands with Duck Creek Technologies (a player defining the future of property and casualty (P&C) insurance), and Microsoft. Earlier collaborations with Snowflake and Saviynt in areas of data for Cloud and digital identity hint at the clarity the company has on some missing teeth. Ties, meanwhile, have also kept on deepening with Microsoft, Tricentis, and Google Cloud to fill in the requisite capabilities in many important areas. 

There is a lot more under the icerberg’s tip that can come in quite handy as other big IT names struggle to sustain their strongholds in a choppy year. It would be a good time to use the ‘synergy’ card even more strongly.  

By Pratima H