LTM expects AI revenue to eclipse legacy IT services
LTM forecast that AI revenue will eventually surpass its legacy IT business, offering a contrarian signal to investors who have driven the Nifty IT index down more than 23 per cent this year on disruption fears.
LTM expects AI revenue to outpace its traditional services business, CEO Venu Lambu said. The projection comes as the Indian IT sector grapples with investor fears that advanced artificial intelligence models will render legacy outsourcing models obsolete.
Those concerns have heavily punished Indian tech stocks. The Nifty IT index has fallen more than 23 per cent year-to-date, putting it on track for its second-worst annual decline since 2008. Lambu’s bullish stance directly challenges this market consensus.
LTM backed its forecast with newly disclosed financial metrics. The company posted a 6.1 per cent year-on-year increase in first-quarter revenue and revealed its AI revenue for the first time. That figure stands at $150 million on a quarterly run-rate basis, accounting for 12 per cent of total revenue across three AI-native businesses.
That 12 per cent metric dwarfs recent disclosures by larger peers. HCLTech reported advanced AI revenue of $171 million in the June quarter, representing just 4.6 per cent of its overall revenue. LTM's figure deliberately excludes enterprise AI revenue, which involves embedding AI into existing client technology stacks.
To capture this growth, LTM signed a partnership with Anthropic on Monday to deploy the Claude model to enterprise clients. Lambu argued that deploying powerful large language models from Anthropic and OpenAI will create a lucrative new implementation market for IT firms. The goal is to deliver these capabilities "with the right context at the right costs."
While "pretty much all" deals now include an AI component, Lambu noted that expensive frontier models are not required for every business scenario. He expects projects to start small but accelerate rapidly in the second half of fiscal year 2027. "Once you deliver a proof point to the customer, it just multiplies with the same customers," he said.
A "big concern" for clients remains the operational expense of these tools. Lambu highlighted that AI firms are increasingly using token-based pricing models that charge based on usage. Consequently, LTM is focusing on helping companies establish governance frameworks to control these variable costs, a service that could become a critical differentiator as deployments scale.
