THINK L&T, and the images that spring to mind are engineering marvels of imposing size, scale and sophistication. However, this leading Indian conglomerate is more than a brick-and-mortar business. Over the last few years, it’s been steadfastly charting a course that will see the rise of its digital technology portfolio.
"L&T saw a twofold opportunity in digital. First, to digitally transform its own operations and use the transformative technologies to get better at what it was already doing well. Second, to see digital as a new business opportunity that could shape its future portfolio. L&T started doing both – it acted swiftly with determination, speed and scale,” says Mr S N Subrahmanyan, the CEO & MD.
L&T has been a big user of IT since the mainframe era, keeping pace with IT developments for its internal systems. L&T Infotech, the Group’s IT Services company, has been growing steadily since its inception over two decades ago. L&T Technology Services specialises in engineering and related services, has been around for over 15 years, and is growing well. Then, last year, it acquired Mindtree – a booming IT services start-up founded in 1999.
ENTER DIGITAL TECH
In 2014-15, as Mr Subrahmanyan put it, “Digitalisation and digital transformation were sweeping the business world. L&T saw and experienced this first-hand from its IT service clients.” In 2016, L&T began digitally transforming its construction business, creating a new digital group from scratch.
“The digitalisation effort within the group has been a mammoth exercise, executed at speed and scale. In less than three years, every possible technology – IOT, Cloud, Mobility, Drones, BIM, AR, VR, Analytics, AI, and ML scanning – was tapped and put into production, without spending too much time on proof-of-concepts and pilots,” explains the L&T CEO.
Today, over 50 of these digital solutions are widely used by thousands of L&T’s operating staff at hundreds of project sites. Over 11,000 construction machines have been connected, speeding up productivity. Mobile Apps have digitalised many processes. Geospatial technologies have sharpened the accuracy and speed of geographic information.
The digital transformation that started in construction is now pervasive in L&T’s other businesses too with manufacturing factories connected and implementing Industry 4.0 solutions and adapting solutions from construction for workmen safety and productivity, material tracking, equipment monitoring and project progress monitoring.
Next, L&T turned to the business opportunities in the digital sphere, adopting a systematic, multi-pronged approach. L&T’s IT service companies started developing digital solutions for clients, making organic progress. But the fields of Big Data, Analytics, Machine Learning and Artificial Intelligence were niche areas. It became necessary to infuse fresh ideas, solutions and talent to enable the IT companies to leapfrog into a more advantageous position with modern offerings. Therefore, they made multiple acquisitions (see photo table above).
The acquisitions gave L&T’s IT companies ready access to cutting-edge technologies, solutions and skills, and helped them beef up their presence – and revenues – in the digital space. “While enhancing the capabilities of the IT service companies, it was time to add to the technology portfolio substantially to keep pace with the speed at which the other core businesses were growing. L&T decided to add to its technology portfolio through a bold and major acquisition,” explains Mr Subrahmanyan.
This was also the rationale behind acquiring Mindtree last year, for its expertise in delivering digital transformation and technology services from ideation to execution. Then, L&T’s Smart World & Communication (SWC) vertical enabled L&T to implement cutting-edge technology that enables governments and city police forces perform vital monitoring functions like never before.
REAPING THE DIVIDEND
Soon, the time came to monetise the digital solutions that worked so well for L&T. Thus, was born last year L&T-NxT, which is now refining solutions, adding to capabilities and resources and getting ready for a big pie in the market. The digital revolution is transforming other areas too.
“Leveraging L&T’s usage and expertise in areas hitherto used for its internal use, L&T decided to begin two ventures to build public-facing platforms that could be new businesses,” explains Mr Subrahmanyan. The conglomerate is now grooming the two new ventures - L&T Edutech and Sufin - ground-up to turn them into valuable digital properties in the next few years.
L&T EDUTECH will leverage L&T’s pedigree of in-house skilling and learning & development programmes. It’s inherent expertise and strengths in core engineering, manufacturing, technology and digitalisation. All these will converge in delivering solutions in employability assessment & recruitment, reinforced learning & reskilling and vocational training. SUFIN, a financial supply platform, will establish L&T’s presence in the e-commerce marketplace, drawing on the strengths of L&T Financial Services. INNOVATION FUND aims to invest in attractive start-ups operating in industries and domains congruent to L&T’s businesses.
L&T is heading towards an attractive balance in its portfolio. As Mr Subrahmanyan sums it up, in the core projects business, it will continue to be at the forefront of building the things that make India proud, setting new benchmarks and benefiting from digital technologies to reap operational efficiencies.
The initial, calibrated moves are now gathering momentum, and the future will see this 81-year-old conglomerate make giant strides and emerge as a formidable player in the technology and digital space.