LTIMindtree anticipates that the impact of macroeconomic conditions will bottom out in the third quarter, coinciding with companies formulating new budgets for the next calendar year. Subsequently, a gradual rise is expected to follow in the last quarter, said Debashis Chatterjee, CEO and MD, LTIMindtree.
Caution in the demand environment continues to persist with longer decision cycles, conservative decision-making and a reduction in discretionary spending. “We are hoping the budgets will come back in January, as companies begin a new fiscal and we will possibly have more visibility on that by November-December,” Chatterjee told businessline.
Profit margins
In Q2, the company saw its profits marginally decline 2 per cent on a y-o-y basis and remain almost flattish on a q-o-q basis. Chatterjee however notes that the ramp-up of deals signed in the last two quarters is on track, and builds confidence of having a better second half of the year forward.
The CEO notes that the margins had a 200 basis point impact from wage hikes in Q2 and is confident of expansion going forward and exiting the year at 17-18 per cent. It currently has a margin expansion program in place that will help in internal optimisation over the whole fiscal.
In the current demand environment, the company is seeing the impact of the downturn across industries and the caution remains broad-based. The BFSI vertical, more than others is more conscious, given its sensitivity to interest rate fluctuations. Chatterjee believes in case of market improvement, the bounce back will be broad-based and across sectors and geographies, without any outliers.
LTIMindtree saw 794 employee additions this quarter, even as large peers saw headcounts dipping. The CEO noted that the utilisation mark has hit its high at 86 per cent, which inevitably suggests that as the company closes more deals, it will add more people to the workforce, both laterals and freshers.
Talking about Generative AI, the flavour of the season, Chatterjee said that the Canvas.ai platform has been gaining good traction. It currently has over 100 active conversations and over 20 active engagements on the platform with its clients. “There is a lot of work in progress, but once we get to a mode where we declare success in a specific instance, then that will be rolled out as a larger solution for particular clients,” he said.
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Published on October 19, 2023
