'There is tremendous amount of caution in the environment'

'The macros that are playing out -- inflation rate, elections in many countries, including the US, and wars -- are probably playing in the minds of clients.'

Amid a challenging macro-economic environment, LTIMindtree posted a tepid sequential revenue growth of 1.2 per cent at Rs 9,017 crore in Q3 on account of higher-than-expected furloughs across all verticals.

Q3 is a seasonally weak quarter for IT companies due to higher furloughs resulting in lower billable hours.

Debashis Chatterjee, chief executive officer (CEO) and managing director (MD), LTIMindtree, speaks about the overall demand environment and company's strategy, in a virtual interview with Ayushman Baruah.

How is the overall demand environment and what's your outlook for Q4 and beyond?

As far as the demand environment is concerned, it is a very challenging macroeconomic one.

There are significant delays in decision making with restrained client spending.

The only areas clients are spending are around cost take-out initiatives or some specific regulatory or cyber initiatives.

These are expected to give them return on investment (RoI) in the short term.

There is a tremendous amount of caution in the environment right now.

We were supposed to close a few deals this quarter, which got deferred to the next quarter.

And, given that many of the deals are cost take-out, multi-year ones, it is going to take more time in ramping up revenues.

In terms of outlook, it's very difficult to call out anything specific at this point in time.

The macros that are playing out -- inflation rate, elections in many countries, including the US, and wars -- are probably playing in the minds of clients.

This is forcing them to behave in this unprecedented manner.

While slowdown in deals is known, have you seen any cancellations yet?

We are seeing a delayed decision making from clients but I don't think there is a situation where we have seen deal cancellations.

Projects with discretionary spends have significantly come down.

Why has your banking, financial services & insurance (BFSI) vertical declined 1.4 per cent quarter-on-quarter (Q-o-Q) in Q3?

The insurance component of the BFSI portfolio is quite resilient.

As far as banking and financial services is concerned, this is one vertical where we saw a higher impact of furloughs, specifically in Q3. But we expect gradual recovery as we go along.

As a larger combined entity now, are you chasing more large deals?

We have always had a dedicated team for large deals for quite some time now.

If you look at the overall order deal flow of $1.5 billion during Q3, we have quite a few large deals that span over multiple years.

Right now, a significant portion of our deal pipeline is large deals.

What are your initiatives on generative artificial intelligence (GenAI)?

We have launched a separate horizontal practice on GenAI.

The idea is that GenAI has to be infused in all the service lines we have.

We have completed our target of training 10,000 associates in GenAI and the eventual goal is to have the entire organisation trained on it.

Do you have any acquisitions in the pipeline? What's your acquisition strategy for FY25?

We do not call out details of our acquisition plans.

We are continuously looking at targets, which can be strategic additions to our overall strength.

In terms of criteria, the target has to create a differentiation in our service line capabilities or a specific geography we are operating in. We will never do an acquisition just to add some numbers.

Feature Presentation: Rajesh Alva/Rediff.com