L&T Targets Over 15% Revenue Growth for Its $6 Billion Services Businesses

Key Takeaways

• L&T wants its services businesses LTM and LTTS to achieve annual revenue growth of more than 15%, compared with the current 10–11%.
• The two businesses together represent a services portfolio valued at approximately $6 billion.
• LTM operates in IT services, while LTTS focuses on engineering research and development (ER&D) services.
• L&T sees AI-led disruption as an opportunity to compete for clients and access experienced technology professionals.
• The company plans to find new markets and business opportunities, particularly in the US and Europe.
• LTTS reported 12.1% year-on-year revenue growth in Q2 FY27, while its long-term strategy targets 13–15% revenue CAGR over five years.

L&T Wants Its Services Businesses to Grow Faster

L&T is seeking to increase the growth rate of its services businesses from the current 10–11% to more than 15% annually.

R. Shankar Raman, the company’s president and whole-time director for finance, said the group needs to accelerate growth in both LTM and LTTS. He described the businesses as mid-sized players in their respective industries and argued that they need higher growth rates to scale.

The two businesses operate in different but complementary segments:

• LTM: Provides IT services, digital transformation, technology consulting and business solutions.
• L&T Technology Services: Provides engineering research and development services, including product engineering, industrial technology, mobility, sustainability and digital engineering.

Together, they give L&T exposure to enterprise technology spending and engineering services beyond its traditional infrastructure and construction businesses.

The immediate challenge is to identify additional markets and service opportunities that can support faster growth without weakening profitability.

What Are LTM and LTTS?

LTM and LTTS are separate businesses within the L&T group.

LTM operates in the information technology services market, where it competes for enterprise technology and digital transformation contracts. Its services include consulting, software development, cloud, data and AI-related solutions.

LTTS focuses on engineering and research services. Its clients include companies in automotive, industrial products, medical technology, telecommunications and other engineering-intensive industries.

The distinction matters because AI is changing both markets, but in different ways. IT services companies are adapting to automated software development and enterprise AI adoption, while engineering services providers are applying AI to product design, manufacturing, testing and industrial processes.

L&T’s growth ambition therefore depends on its ability to identify opportunities across two different customer markets.

AI Disruption Could Create New Growth Opportunities

L&T sees the disruption caused by artificial intelligence as an opportunity for its services businesses.

Raman said AI-led changes could reduce the advantages enjoyed by established technology companies and create a more level competitive environment. This could allow mid-sized service providers to compete for projects that were previously difficult to secure.

AI adoption is changing how companies develop software, manage data, automate operations and design products. Businesses are increasingly looking for technology partners that can implement AI systems and integrate them into existing processes.

For LTM, this creates opportunities in areas such as enterprise AI implementation, cloud modernisation, data engineering and automation.

For LTTS, opportunities include AI-enabled engineering, industrial automation, software-defined products and intelligent manufacturing systems.

However, the disruption also creates challenges. Traditional services providers must adapt their delivery models as AI tools automate tasks that previously required larger teams of software developers and engineers.

L&T’s strategy is to use the shift to build new capabilities and win business rather than rely only on conventional outsourcing contracts.

L&T Looks to Hire Technology Talent Amid Industry Layoffs

Another opportunity identified by Raman is the availability of experienced technology professionals following workforce reductions at several companies.

He said some competitors had expanded their workforces aggressively during the COVID-19 period and were subsequently resizing their operations. This has created an opportunity for L&T’s services businesses to recruit professionals with specialised technical and industry knowledge.

The availability of experienced talent could help LTM and LTTS strengthen their capabilities without having to depend entirely on fresh hiring and long training cycles.

For engineering services, domain expertise can be particularly valuable. Professionals with experience in automotive systems, industrial equipment, electronics and manufacturing can help companies deliver specialised projects.

However, recruiting talent alone will not guarantee faster growth. The businesses will also need to convert these capabilities into new contracts and maintain utilisation and margins.

US and Europe Are Key Markets for Expansion

L&T is also looking to expand its services businesses geographically.

Raman indicated that demand for these services is stronger in the US and Europe than in India. The two businesses will need to identify new customers, markets and service opportunities to support their growth ambitions.

The US and European markets offer opportunities across enterprise technology spending, engineering outsourcing, industrial modernisation and AI adoption.

For LTM, growth could come from helping companies modernise technology infrastructure and implement AI-driven business processes.

For LTTS, demand could emerge from engineering transformation, software-defined mobility, industrial automation, sustainability and next-generation product development.

Expanding in these markets will also expose the companies to competition from large global IT services providers and specialised engineering firms.

LTTS Already Has a 13–15% Long-Term Growth Ambition

LTTS has separately outlined a five-year strategy called Lakshya 31, under which it aims to achieve 13–15% revenue compound annual growth in US dollar terms.

The strategy focuses on six technology areas:

1. Artificial intelligence.
2. Software-defined mobility.
3. Plant modernisation.
4. Industrial automation.
5. Next-generation computing and AI infrastructure.
6. Medical technology.

LTTS reported revenue of ₹3,040.4 crore in Q2 FY27, representing 12.1% year-on-year growth. Its revenue in US dollar terms reached $317 million, with constant-currency growth of 4.8%.

The company also reported an EBIT margin of 16.3%, an improvement of 60 basis points over the previous quarter.

Large deal total contract value bookings exceeded $200 million during the quarter, with AI-related deals accounting for more than half of the total.

These results indicate that LTTS is already investing in AI-related capabilities and engineering services opportunities. However, its quarterly growth figures and long-term targets should be viewed separately: a single quarter does not establish that the company has achieved its five-year growth ambition.

What Faster Services Growth Means for L&T

L&T’s push to accelerate services revenue reflects the importance of building businesses that are less dependent on large infrastructure and construction projects.

Engineering and IT services can provide exposure to recurring enterprise spending, technology transformation and global outsourcing demand. These markets also allow L&T to use its engineering expertise across industries and geographies.

The group has previously highlighted the importance of services in its overall business mix. Its FY26 annual report said services businesses recorded 12% year-on-year growth and accounted for 26% of group revenue.

Increasing growth at LTM and LTTS could strengthen this part of the portfolio, although the businesses will need to balance expansion with profitability.

The Bigger Picture

The AI transition is creating both opportunities and uncertainty for India’s IT and engineering services industry. Companies that can combine technical talent, domain knowledge and AI capabilities may be able to win new contracts and expand into higher-value services.

For L&T, the opportunity is to use its established engineering presence and technology businesses to compete in a changing global services market. Its focus on the US and Europe also reflects the importance of international demand for companies seeking growth beyond the domestic market.

However, the target of more than 15% annual growth is an ambition, not a guaranteed outcome. Achieving it will depend on new client wins, the pace of AI adoption, talent availability, pricing and the ability to convert demand into profitable revenue.

Looking Ahead

LTM and LTTS will need to demonstrate that AI-related opportunities can translate into a sustained increase in revenue growth. New markets, specialised offerings and access to experienced technology professionals will be important parts of that effort. Investors will also watch whether faster growth can be achieved without sacrificing operating margins.

LTTS’s Lakshya 31 strategy provides a measurable long-term growth target for its engineering services business, while L&T’s latest comments establish a broader ambition for both services arms. The next few quarters should provide a clearer indication of whether the group can move from its current 10–11% growth range towards the targeted level above 15%.

Frequently Asked Questions

1. What revenue growth target has L&T set for its services businesses?

L&T wants its two services businesses, LTM and LTTS, to accelerate annual revenue growth to more than 15%, from approximately 10–11% currently.

2. What are LTM and LTTS?

LTM operates in IT services, while L&T Technology Services provides engineering research and development services to industries such as automotive, manufacturing, telecommunications and medical technology.

3. How is AI expected to help L&T’s services businesses?

L&T believes AI disruption could create new opportunities for mid-sized service providers by changing competitive advantages and increasing demand for AI implementation, automation and engineering solutions.

4. Which international markets is L&T targeting?

The company is looking for new markets and business opportunities, particularly in the US and Europe, where demand for IT and engineering services is stronger.

5. What is LTTS’s Lakshya 31 strategy?

Lakshya 31 is LTTS’s five-year strategic plan, which targets 13–15% revenue CAGR in US dollar terms. Its focus areas include AI, software-defined mobility, industrial automation, plant modernisation, next-generation computing and medical technology.

6. How much revenue did LTTS report in Q2 FY27?

LTTS reported revenue of ₹3,040.4 crore in Q2 FY27, up 12.1% year on year. Its US dollar revenue was $317 million.

7. Is the 15% growth target guaranteed?

No. It is a management ambition. Actual growth will depend on new contracts, market demand, AI adoption, talent availability and execution.