LTM CEO Says Cost Pressures Reflect Market Evolution, Not AI Disruption

LTIMindtree CEO Venu Lambu has downplayed concerns around artificial intelligence-led pricing pressure in the IT services sector, stating that cost challenges are part of a natural market evolution rather than a structural disruption. His remarks come at a time when the industry is grappling with questions around the impact of AI on pricing models and profitability.

Lambu emphasized that the narrative around companies walking away from deals due to lower pricing expectations is being overstated. According to him, such instances are isolated rather than indicative of a broader trend. Instead of resisting pricing changes, he suggested that IT firms must focus on adapting their delivery models to align with evolving client expectations.

He noted that as clients demand more value at competitive prices, service providers need to rethink their cost structures and improve operational efficiency. This includes leveraging automation, optimizing resources, and redesigning processes to maintain profitability while meeting market demands. In his view, the ability to adjust to pricing dynamics will determine long-term competitiveness in the sector.

The CEO’s comments follow recent developments in the IT industry where larger peers like Tata Consultancy Services and Wipro reported revenue declines in FY26, reflecting a challenging demand environment. Additionally, HCLTech recently stepped away from a $1 billion deal, citing unrealistic pricing expectations from clients, highlighting the ongoing pressure on margins across the industry.

However, Lambu pointed out that the bigger challenge for IT firms is not demand but execution. He described the current phase as a “generational shift” in technology, involving transformation across infrastructure, applications, and AI layers. This shift requires companies to overhaul their operating models while continuing to deliver consistent performance to clients.

He stressed that managing this dual responsibility—transforming internally while maintaining service delivery—requires strong execution capabilities. Companies must invest in building organizational agility and technical expertise to navigate this transition successfully.

As part of its strategic response, LTIMindtree is restructuring its business into three core service lines: iRun, which focuses on core IT operations; iTransform, centered on modernization and cloud services; and a new “business AI” unit aimed at developing agentic AI solutions. Lambu indicated that while all three segments will contribute to growth, the business AI unit represents a significant opportunity due to the emergence of new spending categories driven by artificial intelligence.

The company is also expanding its presence in key international markets, including Europe and the Middle East, while strengthening its focus on high-growth sectors such as healthcare, life sciences, utilities, automotive, and aerospace.

Financially, LTIMindtree has demonstrated steady performance despite macroeconomic headwinds. The company reported an 18.8% year-on-year increase in net profit to Rs 1,341 crore for the March quarter, although profits declined sequentially due to one-time exceptional items. Revenue for the quarter stood at Rs 11,292 crore, reflecting both sequential and annual growth supported by improved deal momentum.

Looking ahead, LTIMindtree aims to double its annual revenue from the current $4.8 billion under its five-year “Lakshya” strategy. The company has also reported full-year revenue growth of 11% in FY26, indicating resilience in a challenging environment.

On the workforce front, the company plans to continue hiring fresh graduates while reducing dependence on lateral recruitment. Salary hikes will be distributed across two quarters and linked to employee reskilling in AI, aligning workforce development with the company’s strategic priorities.