Vendor consolidation to drive our growth this year: LTIMindtree

Customers are looking at tightening their spending and saving the last dollar rather than spending more on new age technologies

Cost optimisation deals, technology modernisation initiatives by clients, focus on global capability centres, and LTIMindtree’s unique positioning as a mid-tier information technology (IT) services company will help steer it in the current uncertain macroeconomic environment, according to the company.

 

IT service providers are banking on mid-sized and large cost-take-out and efficiency improvement deals at a time when discretionary spending budgets by clients are frozen amid the threat of a tariff war and its eventual fallout. Customers are saving the last dollar rather than spending more on new-age technologies. 

 

Mid-tier companies stand to gain in this environment because they are often more aggressive in chasing deals at margins which are difficult for large IT companies to manage. “A lot of the clients are reimagining their vendor landscape and that gives us a vendor consolidation opportunity, especially where we are in terms of our size, scale, and capability sweet spot. We tend to gain more than we lose,’ Chief Executive Officer (CEO)-designate Venu Lambu told Business Standard.

 

LTIMindtree has more than $3 billion deals in vendor consolidation in the pipeline out of its $6 billion order book at the end of March 31. The company reported a 2.6 per cent increase in profit in the fourth quarter (Q4) of 2024-25 to ₹1,128.5 crore. On a sequential basis, profit was up 3.9 per cent. Revenue was up 9.9 per cent to ₹9,771.7 crore during the same period last financial year.

 

A report by PL Capital said that a diverse mix of cost take-out, vendor consolidation, and managed service deals is expected to drive growth for LTIMindtree this financial year. Additionally, the continued conversion and engagement within manufacturing and retail should drive better growth than peers. The two businesses contributed 34 per cent to the topline in Q4.

 

“We have the ability to challenge the existing operating model or price point and the agility that clients are looking for in a new set of vendors. It is also about having an appetite for transformation and bringing AI (artificial intelligence) into that conversation. That is why we have this dual mode strategy to address the productivity part in the traditional IT services and also have an agentic AI service going together,” he added.

 

The key concern, however, remains the client’s wallet, which is muted as they prioritise their spends that are important for business. Chief information officers and chief technology officers have to work on the same budget, which means doing more for less.

 

Product engineering, product development, and enterprise applications are some of the critical areas where clients are still spending. “There are engagements where we’re getting orders with regard to the product development but they are happening at a different price point because of AI, where one can get up to 40 per cent productivity gains. There are certain systems which need to be re-engineered even without the AI. And we also continue to see digitising workflows leveraging partnerships with ServiceNow and Salesforce,” added Lambu.

 

CEO and managing director Debashis Chatterjee said that utilisation, excluding trainees — which was 85.8 per cent during Q4 — can be improved further as the company aims to do more with less. “It is all dependent on how the business evolves, and we look at our demand and do the appropriate hiring going ahead. Given the fact that so much is happening around, we also have a motivation to do more with less. So, it is difficult to call out any specific numbers.”