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    LTIMindtree has a great opportunity in cross selling, up-selling & creating wallet share: Debashis Chatterjee

    Synopsis

    “At this point of time, more focus is on how do you do more cross sell and up sell given the 700 plus clients that we have and there is no overlap in terms of clients. There are very minimal overlaps and 10-12 clients which both LTI and Mindtree were servicing. So we have a great opportunity in terms of cross selling and up-selling and creating wallet share.”

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    “We should be able to get back into our normal way of working from the first quarter of next fiscal. That is something which we had called out earlier as well so definitely we anticipate some one time cost to be taken in this quarter Q3 as well as Q4,” says Debashis Chatterjee, MD & CEO, LTIMindtree.

    LTI and Mindtree have been working in cohesion since the merger announcement in May 2022. What synergies have you seen so far and going forward what are the cost savings that you anticipate?
    LTI and Mindtree have been working together with a specific model on specific deals for quite some time, almost for the last three years, ever since the management change happened in Mindtree. It is not that we are working with each other only now. In the last five, six months, we have been much more aggressive in terms of working together and there are quite a few opportunities which we have closed where we work together.

    So definitely there’s cross selling and up-selling and bringing the two teams together and what we expected is definitely working out very well. Coming to cost synergies, we have always been saying that the primary focus of this merger is how to create synergies in terms of revenues as we go to the market. That is the primary objective and cost synergies will follow.

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    At this point of time, more focus is on how do you do more cross sell and up sell given the 700 plus clients that we have and there is no overlap in terms of clients. There are very minimal overlaps and 10-12 clients which both LTI and Mindtree were servicing. So we have a great opportunity in terms of cross selling and up-selling and creating wallet share.

    But over a period of time as we get into the integration activities, we definitely understand synergies in terms of costs, whether it is real estate or something which will be more back ended. I would say that the cost synergies will be more back-ended. The front-ended will be more revenue synergies and our aspiration is to make sure that we continue our journey of profitable growth and we want it to be industry leading.

    The benefits will be more long term and back ended and it is fair to assume that profitability will take a hit in the near future because of the integration costs. What quantum should we now factor in when it comes to the operational numbers? Would margins stay below 18% over the next two to three quarters?
    I may not be able to call out right now but what I can definitely say is that in this kind of a scenario, there is a lot of integration cost that one incurs and we have done this in a very fast and record time and our anticipation is that for the next two quarters – Q3 and Q4 – we always anticipated there will be some one-off cost that we need to take and that is the cost related to the integration.

    We should be able to get back into our normal way of working from the first quarter of next fiscal. That is something which we had called out earlier as well so definitely we anticipate some one time cost to be taken in this quarter Q3 as well as Q4.

    Since we are talking about headcounts, the big talking point as well is the mass layoffs that we are seeing in big tech in the US as well as the layoffs back home in IT and IT services companies. What has been the impact? What has happened to attrition and what is happening to employers’ game plan when it comes to new jobs?
    I can only say that what we have seen in the last 12 to 18 months is probably something that we have not seen before. In my view, it has not been very rational behaviour but we are seeing early green shoots of attrition stabilising and I do not think high attrition is sustainable. It is not good for the industry to be honest but over a period of time, it has to subside and cool off as we go along.

    The other concern with respect to the merger was the manpower churn. Do you anticipate attrition to stay elevated after the merge not only because of the industry issues but also largely on the back of restructuring?
    There are multiple stakeholders who are watching this closely including our own employees and I can only say that the reaction from the employees of both the entities and now the merged entity has been very positive. High attrition has been an industry phenomenon. I do not think there will be anything which will be elevated because of the attrition. We have enough employee town halls happening throughout this week after the merger and all the conversations I have had so far, all the chatter that I have heard so far is very positive for the employees.

    They are all looking forward to this merger and to getting more opportunities to work in various different engagements as we go along and that matters to the employees.

    Moving on the combined entity, it is going to become the fifth largest by market cap. There is also a little bit of speculation as to whether or not the company is going to make it to Nifty50. What are your comments and how are you looking at the combined entity scaling up?
    As far as Nifty 50 is concerned we have to wait and see. I do not think I am in a position to comment on that but what I can certainly say is that in the last three years of our journey in both the entities, we have been competing with everybody. It is not that we will be competing with all the other bigger players now.

    What we are saying is that we are now in a position to be competitive with better strength that we have in terms of our service line capabilities and stronger ability to stitch end to end solutions with the combined entity across the industries that we are servicing.

    That gives us the confidence in terms of participating in larger, complex deals as and when they come up and that gives us the confidence to stitch better solutions for clients and that is what even clients are expecting and our partners are talking about. Overall, we are very bullish in terms of the capabilities that we bring on the table as a merged entity.

    Leave us with your reading of the demand environment. How have things changed in the last 6 to 12 months with multiple global headwinds?
    In certain pockets, we have seen some softness and interestingly some of the conversations that we have been having with our clients have also shifted more towards efficiency rather than discretionary spend which enhances their revenues for our clients. It is not that we do not see softness in certain pockets, but the interesting thing is that even within the same industry, no two clients are behaving the same way.

    Everybody has been in the journey of their own transformation and we have to acknowledge that the last 18 months through the pandemic, every client in every industry has been undergoing certain transformation, reimagining their business models. Everybody is at a different point of their transformation and it is very difficult to call out a one-size fit all kind of an approach.

    Yes we are watching the space very closely, there are definitely a few clients who get impacted because of the supply-chain issue on China, the war in Russia, in Ukraine because the Russia and Ukraine both were markets for them so there are pockets of isolated cases like that but overall at this point of time, we are more focussed on the portfolio of clients we have and we are very confident that if we can play both on the revenue enhancing side as well as the cost efficiency side, we should be able to continue to grow our business as we have been doing.

    Our vision is very simple – we should have profitable growth and we want it to be industry leading.



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    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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