AI deals keeping pipeline steady, says LTIMindtree CEO Venu Lambu

LTIMindtree sees strong growth visibility as a robust pipeline of renewals and AI-native deals spills into next fiscal, even amid an unchanged macro environment

LTIMindtree is expecting a robust deal pipeline spilling into the next financial year, which is a mix of renewals and pure-play artificial intelligence (AI) ones, providing it with a better growth visibility. This comes even as macroeconomic conditions remain unchanged after a turbulent year. 

“The AI native businesses which are around AI engineering, reimagining business processes and AI business operations, are also getting slightly larger from a couple of quarters back. So, I'm fairly optimistic and confident about continued deal closures for us,” Venu Lambu, chief executive officer (CEO) and managing director (MD) told Business Standard in an interaction. 

LTIMindtree has managed to close a few large deals in the recent past. It has signed two deals with the central government – one with Central Board of Direct Taxes (CBDT) and the other for upgrading the PAN network. 

Besides this, it signed a $100-million deal with a US chemicals company, a $450 million deal with an agribusiness firm and $580 million with a media and entertainment company this financial year. 

Renewals — which are mainly vendor consolidation and cost optimisation deals — often tend to be large-ticket ones. New deals are considerably smaller as clients focus on modular, AI-assisted slices and micro-waves of modernisation to generate greater value. 

Lambu did not elaborate on how large the AI deals have grown to. 

But he said such deals involve the forward deployment engineering capabilities on the foundation models and integration aspects. Or, it involves working with data platforms, agentic engineering work using the firm’s Bluehorse ecosystem, data modernisation for AI and managing business processes using agentic intervention with agents and humans in the loop. 

Blueverse is the company’s suite of AI services and solutions to help enterprises accelerate AI concepts to value journeys. 

“I think in the first three, we are seeing increased traction. And, the digital operations where the business process at scale is being driven through agents, those conversations have started now. The first three ones are pretty much the heart of our growth trajectory already. And then most of the discretionary spend is actually going in that area,” he said. 

The cost optimisation deals continue to bring in healthy revenue for the company. 

“I do feel that the ones which have a significant expertise of infusing AI into the existing services and the ones that can structure an integrated solution kind of construct tend to gain a lot,” he added. 

AI and generative AI (GenAI) are expected to play crucial roles in deal renewals, going forward, as clients look to build more efficiencies into their operations and reduce costs. According to experts, enterprises have to reduce costs. But unlike in the past, they are not banking those savings. They need the savings to fund transformational programmes around AI, which are shaping the contours of current deals. 

Traditional large and mega deals, classified as ones which have a total contract value (TCV) of more than $75 million, dropped to 18 per cent of the total number of deals signed till September, from 25 per cent in 2023, according to data from HfS Research. 

In comparison, TCVs of less than $30 million have inched up to 48 per cent from 45 per cent in the same period. This means that the new deals will be based on outcome assurance and not time and headcount – the decades-old structure which helped Indian IT firms blossom into global heavyweights in the last three decades.

 

Lambu has been banking on large deals to drive top line in an uncertain macroeconomic environment. Those are primarily cost take out and efficiency improvement ones as customers tighten spends. 

LTIMindtree has been winning such deals at an astonishing pace. It has signed two deals with the central government – one with Central Board of Direct Taxes (CBDT) and the other for upgrading the PAN network. 

He added, “I think macroeconomic parameters are there and there's nothing you can do about that; it's beyond your circle of influence. But our customers are in the same macroeconomic environment. So, they want to address both the revenue challenge as well as the cost challenge for themselves.”