BENGALURU, NEW DELHI : Extreme caution among clients in the global market has sparked a slowdown across verticals in the IT industry, Debashis Chatterjee, managing director and chief executive officer of LTIMindtree said. The trend is reflected in LTIMindtree’s quarterly earnings as well. The company’s target of achieving 17-18% operating margin by this quarter is being pushed back due to the slowdown, and this could also impact its long-term $10-billion revenue goal, Chatterjee said in a post-earnings interview.
Edited excerpts: Delays in decision-making among clients continue. This is impacting our ability to predict upcoming quarterly businesses, to some extent. It’s not just us—the entire industry is facing that.
There are also deeper, wider furloughs in the December quarter. There are furloughs in industries which never used to have, such as oil and gas, and manufacturing. In fact, slowdowns are not just in these verticals—they’re broad-based.
Also, given that we’ve signed many end-to-end, managed services and cost-takeout deals, there is pass-through income from them that came into account. We traditionally have some pass-through in December and March quarters, but the proportion we had this December quarter was significantly higher than normal. This has impacted our Ebit (earnings before interest and taxes) to some extent.
In our five-year plan post-merger, we spoke of 17% Ebit at the end of Q4FY24. This was part of a long-term plan we made based on expected revenue for December and March quarters in this financial year. Given that revenue has been affected due to various factors, we feel it is appropriate to push the margin goal.
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