L&T Technology Services thrives amidst AI revolution in software industry

L&T Technology Services Ltd, is a very interesting company within the larger L&T group.

Its whole focus is on software for engineering services. About the same vintage as its sister software company L&T Mindtree Ltd, in the beginning many wondered why AM Naik, then executive chairman of L&T, would want to have two separate software companies. But Naik, ever the engineer at heart, was very clear. While one company, later renamed as L&T Mindtree after the contested takeover of Mindtree, would be a company focussing on servicing the financial sector (BFSI-banking, financial services, insurance) like most other Indian software companies, the other one L&T Technology Services Ltd, would be a pure play engineering software services company.

Naik’s vision has been translated into the reality of a very successful pure play engineering services software company.  LTTS now has 24,000 employees in different locations, with a turnover of over of over R10,000 crore. And with a market cap of approximately R50,000 crore (depending on the market fluctuations of its share price). With price/earnings and price/book and return on equity ratios not very different from the BFSI-related, software companies, LTTS is a huge success story in its chosen field. It is true that it has only one third the market cap of its sister L&T Mindtree, and is also a minnow compared to the top rung Indian software companies like TCS, Infosys, HCL, Wipro and Tech Mahindra which had a head start. It is also true that all the biggest software companies have large divisions that also work on engineering, health and tech issues and often compete with LTTS. But that does not detract from LTTS’ success. 

Under the leadership of Amit Chadha, a 15-year veteran with LLTS, the company has grown from strength to strength. When he joined the company in 2009 along with the then CEO Keshab Panda, Naik gave them a target to grow the business from $50 million to $500 million in 5 years. They achieved the target in six and a half years. With Chadha as CEO, the company comfortably crossed the $1 billion mark and closed the last year at over R10,000 crore. It has a short-term target of getting to $2 billion, and a slightly longer-term target of crossing $3 billion – with each division Mobile, Tech and Sustainability, contributing $1 billion each! 

It is a reflection of its underlying strengths that Chadha is confident of meeting these targets.

In the software world swamped with dire predictions as to what AI and particularly Agentic AI will do to the business of software companies, particularly in the banking and finance sector, Chadha, focused on engineering software, believes that companies  such as LTTS will not be hit, but will see their business expand, with AI only contributing to productivity. They see an expanding range of industries that they will serve creatively. AI can never displace human creativity and ingenuity.

In the coming years, we will see more software companies emerge that
focus on knowledge and specialisation in narrow but  deep fields like health care, mobility or closed systems using 5 G and 6 G for manufacturing operations using A.I. LTTS will be one company to watch for in this brave new world.