‘Customer looking at outcome, not technology’

LTI, formerly L&T Infotech, achieved over $1 billion revenue last fiscal. As the company focuses on its growth path, Sanjay Jalona, chief executive and managing director of LTI, says the push would be to increase digital business and look at outcomes in p

You are increasing focus on digital, but traditional IT services still contribute over 60 per cent of the revenue?

If you look at two years, since I joined this company we have focused very systemically, driving up structural advisory relationships with our customers. Since the exit of FY 2016, our digital business was less than 20 per cent, today it is 28 per cent as we reported last quarter. So, there is a remarkable opportunity in the marketplace for a company like us, to do and bring value to our customers at the convergence of physical and digital.

That is the where we differentiate and we see tremendous opportunity. It is really growing faster than most people in terms of business . In order to digitise, somebody has to understand the business very well. Once you know the customer’s business, then you can use technology.

How is digital growth offsetting commoditised traditional services business?

Today, customers are spending 80 per cent of their budgets in traditional IT, 2030 per cent in new technologies what we call digital. suspect by 2025, maybe 75-80 per cent will be the new age-digital and exponential percentage business, traditional would become 20-25 per cent. The customer is using the same business processes. I reckon in the next few years, the whole process of counting the digital revenue will change, and that would be the only way IT would be done.

It is not one is disappearing and digital is eating into old one. The way you have to look at this is that the customer will spend the money only in digital technologies.

How is L&T helping you in your business?

For LTI, L&T is our backyard where we can try a lot of these technologies, perfect them and take them to our customers. L&T operates in many sectors — manufacturing, finance, oil and gas and power. One of my largest insurance company client partners is a person who was the CIO of L&T Insurance (which was sold to HDFC Ergo). The type of things that we can experiment is phenomenal. Once we do in the shop floor, the experience that we get we can take to the customers.

Would you take this as a product or solution?

Our whole model is that of providing outcomes. There are too many solutions, products and platforms. What customers are looking at is outcomes. Look at Central Board of Direct Taxes (CBDT), the whole programme is based on us providing linkages to the spend patterns of who are not paying tax — on social media, etc. Everything I get paid (is) by outcomes, by the transactional linkages that I provide. Below that is the whole bunch of platforms and solutions that we build for customers. We even have acquired this company, in seven-eight months — AugmentIQ, an analytics company with a suite of products. We don’t sell the suite, but outcomes. That is what the customers are looking in the changed world. Are you seeing an increase in outcome-based projects? These outcomes-based programmes are typically reported in the fixed price portion of reported revenues for services companies. For us, definitely, there is no other classification today. For us and you would see that for most of the IT companies you will see the fixed prices going up, which is a reflection of customers demanding these outcome-based projects. That is also because there is a maze in terms of new technologies that exist today.