L&T services revenue growth is expected to accelerate to more than 15 per cent annually at its two services businesses, LTM and L&T Technology Services (LTTS), from the current 10-11 per cent.
R Shankar Raman, L&T’s president and whole-time director for finance, said the group was focusing on scaling up both businesses amid artificial intelligence-led disruption across the technology and engineering services industries.
“Services has to pick up pace; we are growing at about 10-11 per cent on a year-on-year basis. For a mid-sized firm, that rate needs to go up,” Raman told reporters.
He said the group wanted both companies to achieve annual growth of more than 15 per cent. LTM operates in IT services, while LTTS focuses on engineering services.
LTM and LTTS to explore new markets and businesses
Raman said both companies would need to identify new markets and business opportunities to accelerate growth.
He noted that demand for their services was stronger in the US and Europe than in India.
According to Raman, companies with quarterly revenues of $5 billion or more can sustain single-digit annual growth because of their larger revenue base. Mid-sized players, however, need higher growth rates.
The group is therefore focusing on expanding the scale of its services operations and strengthening their market presence.
AI disruption creates opportunities for services businesses
Raman identified artificial intelligence-led disruption as one of the factors creating opportunities for LTM and LTTS.
He said technological disruption could reduce the advantages enjoyed by established industry leaders, creating a more level playing field for smaller competitors.
Both companies have recorded initial progress in AI-related businesses. Raman said this was reflected in improvements in their profit margins, adding that sustaining the momentum would be important.
He also pointed to workforce restructuring across the technology industry as a potential source of skilled talent.
Companies that expanded hiring during the COVID-19 pandemic are now resizing their workforces, he said. This could allow LTM and LTTS to recruit employees with specialised technology skills and domain expertise.
“During COVID, companies added people like there is no tomorrow. They are all getting resized now. We are picking up now,” Raman said.
L&T Finance shifts focus towards retail lending
Separately, Raman said L&T Finance had realigned its financial services business to focus more on retail lending. The company has exited riskier segments as part of this shift.
He said the business was deploying technology extensively across its operations, giving it a technology-led operating model.
Raman also highlighted the advantage of L&T’s parentage in accessing funds at competitive rates. This could support the finance business as it works to expand its margins.
