IT firm LTIMindtree sees longer deal closure cycles as macroeconomic headwinds are causing delays in decision-making. Its CEO and MD, Debashis Chatterjee, said achieving double-digit growth in the year will be challenging, albeit the company is confident of demonstrating constant profitable growth.
The firm recorded a 3.4 per cent sequential growth in net profit at ₹1,152.3 crore, translating to a 4.1 per cent YoY growth. Its revenues stood at ₹87,02.1 crore, although sequentially flattish, a 13.8 per cent growth on a YoY basis.
- Also read: LTIMindtree’s PAT flat at ₹1,114.1 cr in Q4
Chatterjee notes that the current demand environment is a paradox. “While we have strong demand and a good deal pipeline, we are also seeing delays in terms of decision-making. Few of our clients in the BFSI sector have stopped onboarding new resources. It is very paradoxical that there is demand, but at the same time, decisions are not being made, he told businessline.
Deferred deals
He added that double-digit growth seems challenging due to reasons beyond control, as deals that were expected to close in Q1 have been deferred to Q2, and the freeze that was expected to end is continuing. Nevertheless, the company hopes continued demand and deal activity will help achieve growth.
Pricing, however, has been stable in the current environment. On the margins front, LTIMindtree is confident of exiting the year in the 17–18 per cent range. “Even after taking wage hikes and other factors into consideration, we will be able to meet our aspiration by the end of the year. We will use multiple levers, such as margin utilisation and pyramid optimisation, to do so,” Chatterjee said. In Q1, margins improved by 30 bps sequentially to 16.7 per cent.
Headcount reduction
LTIMindtree’s headcount in Q1 was 82.738, which is 1,808 fewer employees than the previous quarter. Addressing the same, the CEO said that the headcount reduction is not related to the current demand environment. “The reduction is because of the efficiency gained over the last 2-3 quarters, post-merger. We are referring to one set of systems and processes, and harmonisation has happened across both entities,” he added.
The company will provide annual wage hikes on time; no delays will be made. It will also actively hire freshers and laterals throughout the year, according to the CEO. However, it did not mention specific hiring targets for the year.
Published on July 18, 2023
