ER&D preferred over IT companies by clients, not seen as competition: LTTS CEO

Even as larger IT players are increasingly building their Engineering Research & Development (ER&D) capabilities, L&T Technology Services(LTTS) does not see IT companies as a competition and believes it specific expertise will hold the company in good stead, said Amit Chadha, CEO and Managing Director.

The ER&D sector has emerged as one of the growth hotspots. In FY24, the sector alone has contributed 48 per cent to the total export revenue addition, according to NASSCOM. In tandem, IT services companies like Infosys, HCL Tech and others have been building capabilities and making acquisitions in the space.

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“Engineering order sizes have become closer to IT order sizes. Gone are the days of generic, a lot more specificity is required, and that is what we bring. We are engineers’ engineers. Our clients are preferring ER&D companies as opposed to IT companies, and I believe that we are actually better placed as compared to IT companies, and I don’t see them as a competition,” Chadha told businessline

For the company, market demand remains intact with new areas of growth opportunities rising. Chadha notes that in the automotive sector, the momentum favors software-defined vehicles and hybridization over full electrification, with no signs of slowing down. Plant engineering is experiencing growth, with a constant need for more engineers, especially as multinational companies establish themselves in India and seek detailed engineering support.

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Further, semiconductor demand is finally on the rise. Caution remains in industrial and medical verticals. On the bright side, AI and software-defined solutions are rapidly gaining traction, with around 100 ongoing proof-of-concepts, 70 per cent of which are paid projects.

However, caution still remains in the wake of macro-economic conditions.“The reason we are being balanced is because we are building in some amount of caution in decision making timelines. The pace of decision making seen two years ago has still not come back,” Chadha notes.

LTTS is also expanding its operations in various locations, with new offices coming up in California, Detroit, and potentially Germany, and setting up a security operations center (SOC) in Dallas to focus on serving North American clients. With the international expansions, it aims to accommodate work for next-generation communication companies. In India as well, its operations in Bangalore and Mysore are being ramped up and a new office will be established in Baroda by October.

The company aims to focus building and expanding accounts, leading to larger deals. Emphasis will be placed on technology investments in mobility, transportation, digital manufacturing, AI, software-defined solutions, cybersecurity, and digital manufacturing. Additionally, there are plans to rejig areas, details of which will follow later. In terms of M&A strategy, Chadha notes that LTTS continues to look for automotive companies in Europe, ISV, hyperscaler and med-tech companies in the US.

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