LTTS looking to set up 5G non-public network to build use cases on technology, says CEO Amit Chadha

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26 Aug, 2025 12:21

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Pure-play engineering services company L&T Technology Services (LTTS) reported a 27 percent year-on-year (YoY) jump in its net profit for the first quarter of FY23. The company’s revenue during the given quarter advanced 23 percent YoY. LTTS had closed the fourth quarter of FY22 with seven deals — one over $50 million, four worth $15 million, and two worth $10 million.

In an interaction with Moneycontrol, Amit Chadha, CEO of the company, elaborated on the impact of the current macroeconomic environment, the company’s 5G strategy, hiring plans as well as how LTTS looks to combat attrition. Edited excerpts:

Have you seen any impact on demand due to the current macroeconomic environment, and do you expect any dent in client spending going forward?

I'll answer the question in two ways. The quarter report that came out from Zinnov very recently said that in 2021 globally R&D spending was at $1.6 trillion. A trillion dollars were in traditional engineering and about $650 billion dollars was in digital. For 2025, reports are estimating spends worth $2 trillion on a conservative basis and $2.3 trillion on an optimistic basis.

Having said that, the colour of the dollar is changing, and the spend is changing. If we look at various segments — money is being spent on transportation, electrification, as well as in cybersecurity. It is being spent on discrete manufacturing or anything to do with automation, proactive maintenance, and reducing human interaction. If we look at oil and gas, there's a lot capital expenditure. But if we look at consumption, retail expenditure has not gone down. So, people are spending and we are witnessing a change in the spending patterns.

In fact, I believe that the six bets that we created about 18 months ago are still resonating very well in the marketplace. There will come a time when we have to refresh them. But right now, the six areas — digital products, AI and digital manufacturing, medical technologies, 5G and EACV - is where we see the spends coming. Yes, there are some customers or companies that may not be doing well since their revenue has changed or the cost base is very high, but it's not a segment issue. It's a company issue.

You have spoken about your six bets —  and 5G seems to be the focus currently. What kind of opportunities are there for LTTS and what is your game plan for these bets?

We look at 5G from two or three aspects. One, semiconductor chips that need to be made ready to work for 5G. For that, we’ve made investments and bought a couple of companies. We continue to work with semiconductor companies to develop chips and applications. Second is 5G devices — 5G device testing, 5G device validation, 5G device development, consumer electronics, for various customers. The third area is a 5G rollout infrastructure. We have put our bets with network software provider Mavenir to integrate open radio access network (RAN) products. We're also working with traditional players on infrastructure.

But, the rollout of networks is not at the pace at which people were thinking will happen, it's a little slower. I believe 5G rollout will be a long drawn out affair and is at least a quarter away.

Is LTTS looking at getting captive 5G spectrum?

We have applied for 5G spectrum for our Mysore campus. We will be building use cases in medical emergency room settings and remote operating procedures. In plant engineering, we are implementing use cases on reliable operations and proactive maintenance scheduling. A third area of interest is defence related. We have also set up 5G device testing labs in Bangalore and Dallas, USA.

As per the previous guidance, the company is expected to reach $1 billion in revenue run rate in FY23 and $1.5 billion by 2025. Where do things currently stand?

I am sure that we will get to $1 billion in run rate between Q2 and Q3 of the current fiscal year. I am also sure that we are committed to deliver $1.5 billion run rate by FY25. We provided 13.5- 15.5 percent guidance at the beginning of the year. If I actually look at it in constant currency terms, the guidance now stands at 14.5-16.5%. So, we are holding on to it.

Growth during the quarter was led by plant engineering and industrial products, but telecom and hi-tech was at 0.1%. Can you provide some colour on the same?

It's not just IP and industry products and plant engineering that grew and I see that growth continuing — but transportation in constant currency terms also grew more than five percent. It was hit because of the euro; they got hit because of the yen and that's why you see it at about three percent. In terms of constant currency, we are more than five percent. So, three of our five verticals have grown. Medical is a small vertical. And you know, if one client catches cold, we catch cold, right? So that happens, but I would not worry about it. In fact, I believe that the assets we have created around technology for medical are on par with our transportation assets. It's just a matter of a conservative market space that we are working through. If you remember and go back four years, our IP used to be steady. IP has been growing because we created assets. For medical also, the time will come. For hi-tech, they're fairly choosy on the kinds of deals that we take. In the fourth quarter, we actually walked away from a programme because of low margins and legacy engineering – and we didn't want to do it because it was not adding value, it was margin-diluted. Our margins have progressively improved in telecom, hi-tech. We are choosy in terms of where we are and where we want to be in telecom. If there is a slightly lower margin deal but the technology is really interesting, we'll take it. It is a question of technology, margins, and size. In spite of walking away from that customer in the fourth quarter, we've been able to grow in the fourth quarter and hold our own in the first quarter.

What does the merger of the two L&T group entities mean for LTTS' business and its deal winning capacity? Can we expect synergies between the joint entity and LTTS for projects?

LTTS operates in the Engineering & R&D sector, which is different and distinct from the IT services sector. The IT sector has no correlation with the deal-winning capacity of the ER&D services sector. We do not anticipate any change on that front.

How do you plan to address the attrition? 

Attrition currently stands at 23.2 percent, up from 20.4 percent in Q4FY22. It's an LTM effect. In absolute numbers, attrition in the last three quarters has been similar. It will stay at these levels for another couple of quarters and then cool off.

Our employees got increment with effect from July 1. In January we undertook salary corrections and ring-fencing. We have extended additional benefits to our top 100 employees.

Besides, it’s more important that we provide opportunities to our employees. We cannot promote everybody, but we can provide them with opportunities. We have identified the top 100 people in the company in terms of potential and are upskilling them. They are being offered professional courses. I want to be in a space where 90% of my appointments should be internal in about two years from now. That's what I will term a success for myself as an employee and as a CEO.

What’s the hiring outlook?

We hired about 3,000 freshers last year and are going to hire a similar number this year. We've already rolled out 2,500 offers and we will make the remaining as we move forward. Freshers will come on board in a staggered manner in Q2, Q3 and Q4.

Lateral recruitment will be carried out for specific areas but I will again emphasize, my goal is to promote from within. We hired about 550 people in this quarter. We will stay in a similar range as we move forward because I believe that we need to make sure that we strike the right balance between utilization and hiring.