L&T Group’s Digital Play

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When one thinks of L&T, the images that come to the mind are the many magnificent structures that have become glorious landmarks. These are solid awe-inspiring brick and mortar structures and have become inspirations and engineering marvels when coupled with the fact all these projects were completed on or before time.

But L&T is not just brick and mortar. Its’ DNA is engineering, and technology has always been a part of everything that L&T has done over the years. Over the last many years L&T has deliberately and slowly enhanced its technology footprint and is charting a course in the recent years that will see its technology portfolio increase its contribution vis a vis it’s traditional businesses. 

LTI the IT Services company in the group has been around for over two decades and has been growing steadily. LTTS specializing in engineering and related services too has been around for over 15 years and is growing well. L&T has been a big user of IT since the mainframe days and has kept pace with all the current developments in IT for its own internal systems. 

However, in 2014-15 the world was seeing a tectonic shift with Digital Technologies. These emerging technologies were creating new processes, new business models and entirely new businesses. The foundation for all this was these state- of- the-art cutting edge technologies. Digitalization and Digital Transformation was sweeping the business world. L&T was seeing and experiencing this first hand from its clients of the IT service companies. 

L&T saw the opportunity of Digital as twofold. One to Digitally transform its own operations and use these new technologies to get better at what it was already doing well. Two was to look at Digital as a new business opportunity that could shape its future portfolio.  L&T started doing both and it acted swiftly with determination, speed and scale. 

In early 2016, L&T started  the digital transformation exercise within its construction business, creating a new digital group from scratch. The digitalization effort within the group has been a mammoth exercise and executed at speed and scale. In less than three years, every possible technology like IOT, Cloud, Mobility, Drones, BIM, AR, VR, Analytics, AI, and ML scanning has been tapped and put into production without spending too much time on proof of concepts and pilots. 

Today there are over a 50 of these digital solutions that are in production and widely used by thousands of the operating staff at hundreds of project sites. Every single project site has a slew of digital solutions working. Over 11,000 construction equipment had been connected providing real-time visibility into the operations of these machines at remote project sites.   This visibility enabled improvements in productivity and utilization of these machines, better maintenance and uptime, better fuel efficiency all leading to faster completion of work and savings in costs. Mobile Apps have digitalized every process relating to Safety, Quality, activity completion and materials tracking enabling real-time information flow from the sites to monitoring offices. Geospatial technologies using drones, Lidar, 3D scanning, Photogrammetry etc,. have transformed accuracy and time of geographic information to make engineering and estimation more accurate and competitive. 

The Digital Transformation that started in construction is now pervasive at all 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. 

L&T today is proof that Digital Transformation can be done, at scale and speed and yields tremendous benefits and transforms how people work and take data driven decisions. 

While the internal digital transformation reached a good momentum and was showing success, it was time to look at the business opportunities in Digital and L&T started looking at it systematically in a multi-pronged approach. 

The IT service companies in the fold were beginning to develop digital solutions for their clients and making organic progress, but the fields of Big Data, Analytics, Machine Learning and Artificial Intelligence were niche areas where infusion of fresh ideas, solutions and talent was necessary to enable these companies to leapfrog to a more advantageous position with modern offerings. 

Hence acquisitions were required. Following acquisitions were made over the last few years between the two technology companies: 

Investments Made by LTI:

Investments Made by LTTS:

These acquisitions gave our IT companies quick access to some of the cutting-edge technologies, solutions and skills that these had developed. These acquisitions were quickly integrated into the solution offerings that LTI and LTTS could make to their clients, thereby beefing up their presence and revenues in the Digital Space and enabling better growth. 

While enhancing the capabilities of the existing IT service companies was going on, it was time to add to the technology portfolio substantially to keep pace with the good rate at which the other core businesses were growing. L&T decided to add to its technology portfolio through a bold and major acquisition. Mindtree, a company with expertise in delivering digital transformation and technology services from ideation to execution was acquired through a series of swift moves that culminated the transfer quickly and seamlessly. Mindtree merged into the L&T portfolio smoothly and together with the other IT service companies provided a slew of capabilities and offerings that made the L&T group companies a force to reckon with across many Industry verticals. 

That was not all, L&T was also growing the smart cities business that it had started.  The Smart World & Communication business with its segments in city surveillance and security, Communications and smart cities enabled L&T to make showcase implementations of cutting-edge technology that was helping governments and city police forces in many ways hitherto unthought of. This business unit today houses a sea of capability and talent in networking, security, surveillance, video analytics, command and control centers, and uses AI in many of its solutions.

The Digital solutions that L&T had created for itself drew a lot of attention from consultants and clients and it was time to monetize that and take it to the market with necessary adaptations. Thus L&T-NxT was formed with the objective of taking the Digital solutions to the market in the Industry verticals in and adjacent to the areas of L&T’s core domain expertise. Simultaneously L&T-NxT is refining its solutions, adding to its capabilities and resources and getting ready to hit the markets in India and Overseas with not just IT Services but with tested proven Digital Solutions as offerings. 

The Digital Revolution is more active and relevant in many other Industry verticals other than L&T’s core. Key among these are education and supply chains. Leveraging L&T’s usage and expertise in these areas hereto used for its internal use, L&T decided to begin two ventures to build public facing platforms that could be new businesses for L&T. Thus, the Edutech and Sufin ventures were formed. This is L&T’s first foray into the promising platforms business. These are being grown grounds up and will become valuable digital properties for L&T when they go into production and scale up in a couple of years. 

L&T EDUTECH – With a strong pedigree of skilling and learning & development programmes, L&T is poised to expand its skilling initiatives targeting a larger audience, especially the youth, to offer an integrated platform spanning skilling to recruitment, leveraging L&T’s inherent expertise and strengths in core engineering, manufacturing, technology and its pioneering efforts in digitalization. EDUTECH will focus on three areas of opportunity – employability assessment & recruitment, reinforced learning & reskilling and vocational skills training. 

SUFIN – A financial supply platform to establish L&T’s presence in the e-commerce marketplace. Leveraging its strong brand salience and leadership, L&T is well placed to enter this space on the strength of its relationships with suppliers, SMEs and the ecosystem at large drawing on the strength of group company, L&T Financial Services. 

INNOVATION FUND – The Fund aims to invest in attractive start-ups operating in industries and domains that are congruent to L&T’s businesses with a purpose to augment and differentiate L&T’s core business lines, develop capability at the individual business vertical (IC) level to enhance technical capability and commercial access with investments and collaborations with start-ups to establish a venture capital capability within L&T by building an internal team with the expertise to evaluate, invest and manage portfolios.

Looking to the future, from an overall perspective, L&T is heading towards an attractive balance in its portfolio. In the core projects business, L&T will continue to be in the forefront of building things that make India proud, setting new benchmarks in project execution, benefiting from digital technologies to bring in operational efficiencies.

In addition, a slew of initiatives have been taken up in the last few years to tap the opportunities of Digital as a business. The initial calibrated moves are now gathering momentum, and the coming years will see L&T take big strides in creating a name for itself as a formidable player in the technology and digital space.

Authored by S N Subrahmanyan, Chief Executive Officer and Managing Director, L&T

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