Ambition is to Become a Top 3 Player Globally: LTTS CEO Amit Chadha

Not just North America. I was in fact in Europe two weeks ago, as well as when the election results got announced. And I'm not getting into the politics of one party versus another, but I will definitely tell you that prior to the elections, clients we talked to would normally have a plan A and a plan B, depending on which party came to power. Very interestingly, this time around, especially this time around, I have seen—and I haven’t seen this in a while, though perhaps before my time it might have been happening like this—across the world, there is either a view or an alternate view.

There are no two common views. Take the example of Germany, where now the Chancellor is on notice to prove his majority. Consider the various government transitions that have happened in Europe and the current situation in the U.S.

A lot of our clients were saying, "If it’s A party, this is what we’ll do. If it’s B party, this is what we’ll do." I do believe that with the election having been announced resoundingly in favor of one particular party, there’s a lot more certainty about what will happen and what can happen.

Things are being talked about actively, which will happen anyway. One is that we are experiencing—or are starting to experience—a lot of investments coming into various manufacturing areas in the U.S. Everywhere you go, there’s construction happening.

That tells you there’s new demand—either upgrades happening or new money being spent somewhere. So, I do believe the overall mood is positive. How will this move forward? Where will it go? We’ll see.

Number two is that a lot of localised and regional supply chains are coming up, and that’s happening. Second, we’re seeing AI starting to positively impact a lot of areas. It’s not just about Nvidia but others as well. People are spending money and time on higher compute, higher data, and higher storage. I see this as a positive trend. Clients I talk to are discussing new products, which, to me, summarily turns out to be positive.

So, I’m cautiously optimistic about the environment. I see a lot more certainty than before, and we’ll see where it goes.

Yes, there are three or four clear areas where we expect a positive impact. First, in sustainability, particularly in the discrete and process manufacturing sectors, we see continued spending and growth. Recent developments, such as Siemens acquiring Altair Engineering, highlight the momentum in this space. Additionally, as a significant portion of the workforce retires, the need for automation increases. Factories being built in the U.S. today are far more automated than those from a decade ago, offering a clear growth opportunity.

Second is mobility. While we are about six months away from greater clarity, EV spending and software-defined vehicle (SDV) investments are expected to rise. Fully autonomous vehicles remain unlikely due to the complexity of achieving completely sanitized conditions for such systems, though partially autonomous solutions are already in use. EV advancements, including innovations like range extenders, are creating momentum and will continue driving growth.

Third is technology, encompassing high-tech sectors. Recognizing the shift toward software and AI, we recently acquired a California-based company to bolster our capabilities. This acquisition adds 1,500 software engineers to our existing team, nearly doubling our capacity and strengthening our market impact. These trends position us well for sustained growth.

Our overall ambition at LTTS is clear. If I step back and talk about ambition, right now, we are a pure-play number three in the stacking order. Globally, if we combine IT and engineering companies, we rank around number seven or eight. As a pure-play company headquartered in India, we are number one. However, our ambition is to become a top-three player globally in IT and engineering combined.

For instance, if you take a French major headquartered in France, they are into IT and engineering, with their engineering segment being around $4 billion. Then there’s a company headquartered in Noida, which is also big in IT and engineering, with about $2 billion in engineering. So, our goal is to position LTTS as a top-three player globally in engineering, even when compared with IT plus engineering companies like Cognizant, Capgemini, or HCL.

To achieve this, we aim for $3 to $5 billion in services revenue in the next few years. We’ve already announced our target of $3 billion with an 18% EBIT in the medium term, with a longer-term goal of $5 billion.

Our strengths lie in being a pure-play engineering company, functioning like a pseudo product development organization in services and consulting. Additionally, our willingness to invest in innovation is evident—we now file about 200 patents annually, up from 50 three years ago.

Finally, ongoing technology shifts present significant opportunities for us, as we offer relevant solutions in a growing market.

The reality is that some skills are simply not available, and companies like ours must spend significant time, effort, and money to address this gap. The skill gap is undeniable, and while initiatives like polytechnics and other training programs aim to bridge it, it will never reach zero. Why? Because as universities and colleges update their curriculums, technology is evolving much faster—what once changed every 10 years now shifts every three years. Furthermore, while new technology emerges, older technologies remain relevant.

For example, we are building a digital twin for a chemical major, which includes predicting the remaining useful life of assets like pumps. This requires corrosion engineers to analyze the components, assess corrosion rates, and provide insights. However, finding corrosion engineers is a challenge—we need 50 today, but they are almost impossible to hire even after extensive efforts across India and the Middle East. Parents aren’t encouraging their children to enter such specialized fields, leaving a gap in both new and older technologies.

Similarly, a company manufacturing phones in India struggles to find engineers skilled in jigs and fixtures design. To meet this demand, we’ve hired retirees to train younger employees, a process that takes months.

This skill gap reinforces the importance of becoming a product nation. Services alone aren’t enough; we must create and interact with tangible products. For instance, in our Bangalore facility, we work hands-on with motors, EVs, and autonomous devices, enabling us to bridge the gap between services and innovation.

The way I see it, looking ahead—not just in the immediate term—I believe mobility, sustainability, and tech will offer equal opportunities. While mobility has grown faster than the other two over the past three years, I expect all three to grow equally from here on. That said, sustainability may experience slightly faster growth compared to its historical pace.

For context, mobility has grown at approximately 19%, tech at about 18%, and sustainability at around 10-11% in recent years. Moving forward, I believe all three will grow in the late double digits, likely in the high teens. The market is vast—valued at $70-80 billion or more—and offers significant headroom for growth. India’s talent pool is excellent, and this extends internationally as well. For example, one of our clients recently asked us to take on 100 resources they had in Germany. We agreed and were able to utilize them effectively.

This reflects the globalisation of India’s engineering sector. It is becoming both global and increasingly local in its approach. Over the next 10 years, I see this trend continuing, with India Inc. engineering following the same trajectory as companies like Accenture and IBM. Just as they have grown in India to become massive employers, India Inc. tech and engineering companies will expand globally, becoming significant local employers in international markets.

West Asia is definitely an important focus area. When we started this journey 15 years ago, our focus was on the U.S., Europe, and Japan—three key economies. Today, for companies like ours, the scenario is evolving. In India, we don’t see much work since many companies handle it internally. However, that is gradually changing.

From a geographical perspective, when considering markets with significant potential, the U.S. remains number one, Europe number two, the West Asia comes in at number three, Japan at number four, and India at number five. This prioritization reflects the market size and growth opportunities. Our acquisition of L&T Smart World was a strategic move to establish a stronger presence in the Middle East.

The Middle East is not a product development market; it is asset-heavy, focusing on asset management, smart cities, and telecom. These areas align well with the region's requirements. Contrary to perception, the Middle East is not lagging behind the rest of the world; it is adopting cutting-edge technology. For instance, the AI projects we are executing for asset management in the Middle East are on par with those we handle in the U.S.

Moreover, Middle Eastern companies are expanding globally, acquiring firms in Europe and the U.S. For example, Covestro was recently acquired by ADNOC. This demonstrates the region’s growth potential and global influence, making it a critical geography for our future endeavors.

India must become a product nation. It’s not just about manufacturing. You can’t simply focus on manufacturing without R&D, and you definitely don’t want to be a "build-to-print" nation. If you look at China, it started as a build-to-print nation—you gave them the drawing, and they manufactured it.

That approach creates jobs, but there’s no real value addition. Value comes when you combine R&D with manufacturing, which is a powerful combination. In fact, the Prime Minister recently highlighted this in his speech, and I’d like to think that our work at LGDS contributed to that narrative. Whether or not that’s the case, it’s gratifying to know we were aligned with the same vision.

Look at the engineers graduating from India and the ability of big industrial houses to invest in infrastructure, talent, and proof of concepts ahead of time. This is critical. Yesterday, a customer running a GCC told me, "I’m coming to you because you have the ability to invest ahead of time." That ability gives us an edge.

India’s leapfrogging in technology is evident. While the U.S. or Europe may have gone through multiple technology transitions, India jumped straight to mobile and 5G. An example is how cab drivers in India use voice commands on Google Maps because they may not know how to spell but are comfortable speaking. This adaptability is ahead of what you see in the U.S. or Europe.

Being a young nation gives India the agility to innovate, switch, and adapt quickly. A product nation needs speed, agility, global understanding, and democracy. India has all these ingredients.

Lastly, India’s global awareness stands out. Growing up, I noticed Indians were more informed about world affairs and technology than peers in the U.S. This awareness fosters innovation. A German client recently told me, "Every car we sell globally has a component of Indian engineering in it." It’s not just mechanical—it’s software, hardware, embedded systems, and electronics. That’s something we should be proud of.