While most IT firms saw a strain on the banking and financial vertical with increased cost pressure in North America, L&T Infotech (LTI) has been seeing consistent growth.
According to Sanjay Jalona, the chief executive of the company, there is a lot of positivity in the industry in all verticals.
The digital business of the company has reached 34 percent of the company's revenues. Jalona said that the bracket will only grow as clients look at cost-effectiveness and transformation at the same time.
Here's the full transcript of the interview:
Q: From your perspective, will FY19 be better than FY18 from L&T Infotech’s point of view?
A: Definitely, from LTI’s perspective, we will see continued growth. In FY17, we had around 10 percent growth, FY18 was around 17 percent growth. Where we sit today, we still have a few quarters to go but we are very confident that the growth will continue. We are quite positive and we are also seeing a rebound in the IT industry overall.
Q: Do you think that the clients that you are working with, especially North America financial services clients who had hit the pause button, are now more confident to be able to spend on discretionary expenditure?
A: I think that is what we are seeing. We are seeing a lot of discretionary spend come up there. Tax reforms have helped the companies, the companies are performing a lot better, everyone’s revenues and profitable growth is happening so they are definitely finding newer ways to connect with the customer and with the regulatory pressures on, they are spending a lot of money on analytics and so on and so forth. So I think there is a lot of positivity in the industry overall and this is across the verticals.
Q: Given the kind of discretionary investments that have gone into digital, what is the next target for margins?
A: We want to keep the margin at the band that we are in and when you grow fast, you have additional margins that come into your kitty. We want to invest it all back into the business and grow faster. Our whole target has been keeping the margin where they are and we are a growth company. People should look at it as a growth company as we want to push everything onto growth whether it is acquisitions or building capabilities or even hiring the right set of people, that is more important to me.
Q: You spoke about acquisitions, what is the next big target for you? You have made very interesting acquisitions till date, what specifically are you looking at? Would midcap IT companies interest you or would it be on scale or would it be a specific skillset or product-driven IPs that will interest you?
A: You never say never in an acquisition. But typically, my mind is that we want to acquire for capabilities rather than the size. In today’s world, customers are not hiring you for scale, customers are hiring you for expertise and capabilities and that makes us move towards hiring companies with strong capabilities, they typically will be smaller companies, that is what you have seen us do. We have done two acquisitions in the last couple of years but if the right opportunity comes, size should not be a problem.
Q: You will not shy away from making a big bet if need be?
A: Absolutely not.