Ladies and gentlemen, good day and welcome to Q2 H1 FY 2026 earnings conference call of Quess Corp, hosted by IIFL Capital Services Limited. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Siddharth Zabak. Thank you, and over to you, sir.
Thank you. Ladies and gentlemen, good morning, and thank you for joining us on the Quess Q2 FY 2026 and H1 FY 2026 results conference call for Quess Corp Limited. It is my pleasure to introduce the senior management team of Quess Corp who are here with us today to discuss the results. We have Mr. Guruprasad Srinivasan, Group CEO; Mr. Kushal Maheshwari, Head Investor Relations and Treasury; Mr. Lohit Bhatia, President, India and Global Operations; Mr. Kapil Joshi, CEO of Quess IT Staffing; and Mr. Nitin Dave, CEO of Quess Staffing Solutions. We will begin the call with opening remarks by the management team, and thereafter, we will open the call for a Q&A session. I would like to now hand over the call to Mr. Kushal Maheshwari to take the proceedings forward. Thank you, and over to you, Kushal.
Thank you, Siddharth. Good morning and H1 FY 2026 earnings call. The information, data, and outlook shared by the management during the call is forward-looking and subject to prevailing business conditions and government policy. All forward-looking statements are subject to economic growth or other risks in surrounding. Please refer to slide number two of investor presentation for the safe harbor clause. With that safe harbor clause, I will now hand over the call to our Group CEO, Mr. Guruprasad Srinivasan, for his opening remarks. Over to you, Guru.
Thank you, Kushal. Good morning, everyone, and thank you for joining us for Quess Corp's Q2 and H1 FY 2026 earnings call. We are pleased to report another quarter of solid execution and continued momentum. During Q2, we delivered revenue of INR 3,832 crore, up by 3% year-on-year with highest quarterly EBITDA of INR 77 crore, an increase of 11% year-on-year. Notably, EBITDA margin crosses the 2% mark, and our operating cash flow conversion was at healthy 109%. PAT stood at INR 52 crore with EPS at INR 3.5 per share. We added over 21,000 associates during this quarter, taking our total associate count to 483,115, up by 5% year-on-year, making us India's largest domestic staffing platform.
Due to a ramp down by an NBFC that we had called out in Q4, I mean, around 38,000 associates in Q4, the headcount growth still shows marginal decline of 5% year-on-year basis. However, with sequential growth due to strong sourcing and onboarding and processes, we are confident of delivering headcount growth on yearly basis. In summary, Q2 was a quarter of balanced growth and improving profitability for Quess. We remain focused on operational excellence, margin expansion, and prudent capital management while continuing to invest in high-value segments and technology. We are proud to announce that Quess has been ranked 36th among India's Best Employer 2025 by TIME and Statista ranking, another testament to our people-oriented culture. Let me now walk you through each business segment. General Staffing, highest net adds in last six quarters, backed by festive hiring momentum.
In Q2, General Staffing delivered a robust quarter with 21,283 net additions, our best in last six quarters, driven by seasonal demand, especially in manufacturing and BFSI vertical and consumer retail and telecom. The reported revenue for the segment stood at INR 3,317 crores, growth of 3% year-on-year and 6% quarter-on-quarter. We added 72 new contracts in Q2 across verticals, taking our H1 total to about 151 new contracts. Headcount rose to 470,337, contributing to 86% of our total company's revenue coming in from General Staffing business. Our sourcing engine has scaled significantly with over 65,000 associates who are onboarded via sourcing this quarter compared to 30,000 in Q1.
During the quarter, we have done gross addition of 115,000, that is 1 lakh 15,000 versus 79,000 gross additions in previous quarter, reflecting the strength of our robust hiring reserve. The segment recorded a healthy gross margin with strong execution in collection efficiency. DSO days for General Staffing stays at about 25 days, and continued dominance of our Collect & Pay, which now covers 76% of our headcount. Q2 leading up to the festivals, hiring in sector like manufacturing, financial services, picked up significantly contributing to this uplift. Overall, our General Staffing platform demonstrated a healthy revenue growth and improved headcount utilization during the quarter. The open mandates at the end of quarter stood close to about 27,000 as we step into Q3. Moving on to Professional Staffing.
This platform continues to deliver a double-digit growth in terms of EBITDA margins. Professional Staffing delivered a double-digit growth and margins for a second consecutive quarter with reported revenue of INR 24 crores, 11% year-on-year growth with focus on profitable growth. The segment delivered the highest ever EBITDA of INR 27 crore, a 37% year-on-year growth along with double-digit EBITDA margins at 12.2%. These results were driven by sustained demand for skilled talent in higher value areas during the quarter. We have rationalized our low margin contracts, which led to improvisation on margin on the lower revenue base. Notably, our focus on Global Capability Centers continues to pay off. Roughly about 73% of our Professional Staffing headcount is now tied to GCC-led projects, especially in digital telecom and across.
We added 18 new client contracts in this quarter, and we are excited. I mean, during the period, which is very healthy addition for the quarter, with a pipeline of about 1,300 open mandates. These factors give us confidence in sustainable of both growth and margin for this particular segment. Our top sector continues to be digital, high tech, consumer retail, telecom. These are the sectors where we are getting the demand from. These segments continue to fuel the growth. The headcount of this particular segment increased to 6,862 associates during the quarter. Moving on to international business. Our overseas business also performed well during the quarter. Total international headcount stood at 5,730.
The segment reported revenue of INR 290 crore with 3% year-on-year and 2% quarter-on-quarter growth, with EBITDA of INR 18 crore, which reflects sequential improvement in margin. We saw broad-based strength in key regions, specifically coming in from Middle East, Malaysia, both delivered growth for across IT and non-IT verticals. Philippines had a very strong quarter, roughly being headcount up by 8%, reflecting heightened demand in ITe S, and technology. Our Singapore business remained largely stable, where we continue to offset softness in IT by building up General Staffing there. Overall, these international markets together delivered stable revenue and margin contribution with regions other than Singapore contributing more than 50% of the revenue and profitability. Middle East achieved the highest ever EBITDA of 12.8% with headcount crossing 2,100 associates, supported by new IT, ITeS customers in Middle East.
While Malaysia and Philippines are delivering better than expected profitability, compensating for decline in Singapore. Singapore now has 43% local hires, up from 17% last year across all markets. We continue to emphasize client diversification, local hiring, and digital sourcing models to sustain profitable growth. Moving on to the last vertical, which is fourth vertical, digital platforms. In our digital platform division, we continue to expand scale and specifically on the product-led, which is Hamara Jobs platform now boasts over 12.6 million registered candidate profiles, a clear leading position in India's blue-collar segment recruitment space. Meanwhile, Taskmo, which is our gig workforce model, secured its first large-scale gig contract with a TCV of INR 5 crore, deploying about 1,500 taskers nationwide. These milestones underscore our ambition to build India's largest digital employment ecosystem across blue and gray collar economy.
With that, I'll now hand over to Kushal Maheshwari, our Head of our Investor Relations, to talk through our financial performance for the quarter.
Thank you, Guru. Good morning, everyone, and thank you for joining us for Quess Corp's Q2 FY 2026 earnings call. I will begin with the headline financial performance before taking you through segmental results and strategic updates. For Q2 FY 2026, we delivered another quarter of consistent and profitable growth. Consolidated revenue stood at INR 3,832 crores, representing a 3% year-on-year increase and a 5% sequential rise.
EBITDA for the quarter was highest ever at INR 77 crores, up 11% YoY and 10% QoQ, marking our highest ever quarterly EBITDA with margin crossing 2%. PAT came in at INR 52 crores, translating to an EPS of INR 3.5 per share, up 2% YoY and 2% sequentially. Notably, with no one-time gains or exceptional items this quarter. For H1 FY 2026, revenue grew 3% YoY to INR 7,483 crores, while EBITDA increased by 11% YoY to INR 146 crores, with margin expansion of 14 basis points.
PAT for H1 stood at INR 103 crores, up 3% YoY, with EBITDA to OCF conversion remaining strong at 109%, underscoring the quality of earnings and disciplined cash flow management. We closed the quarter with a net cash balance of INR 273 crores after paying approximately INR 90 crores in dividends, reinforcing our strong liquidity position and balance sheet strength. In line with the stated objective, our focus on margin expansion has started yielding results due to operational efficiency measures and higher mix of high-margin business. From a profitability standpoint, approximately 50% of our contribution comes from high-margin businesses, that is 30% from Professional Staffing and around 20% from our overseas business. Coming to our segmental performance. Our General Staffing business delivered its strongest quarter in six quarters, supported by festive season hiring and broad-based growth across BFSI, retail, and manufacturing and apprenticeship.
Revenue stood at INR 3,317 crores, up by 6% YoY and 3% QoQ, accounting for 86% of our consolidated revenue, while segmental EBITDA was at INR 46 crores, down by 23% YoY and up by 5% QoQ, margins remaining stable at approximately 1.4%. Collect & Pay ratio remains steady at 76%, and cash conversion remains robust with DSO at 25 days. Overall, General Staffing continues to demonstrate operational efficiency, strong cash discipline, and market leadership. Moving on to Professional Staffing business, which continues to perform exceptionally well, delivered sustained double-digit growth in both revenue and profitability. Revenue for Q2 stood at INR 224 crores, up 11% YoY and down by 8% QoQ, while EBITDA was highest ever at INR 27 crores, up 37% YoY and 10% QoQ with margin of 12.2%, thereby maintaining double-digit growth and margins for the second consecutive quarter.
As discussed by Guru earlier, with our focus on profitability, we have rationalized low-margin contracts within the segment, which has led to rising margins on lower revenue base during the quarter. Professional Staffing continues to be a high-margin, scalable growth driver within our portfolio of business. Coming to overseas business, which has delivered a steady and profitable performance with broad-based regional contributions. Revenue for the quarter stood at INR 290 crores, up by 3% YoY and 2% QoQ, while EBITDA was at INR 18 crores, up 27% YoY and 1% QoQ, representing a stable 6.2% margin. Headcount grew by 16% YoY to 5,730, reflecting strong delivery across regions. To summarize, Q2 FY 2026 was another quarter of steady growth, record profitability, and strong cash conversion for Quess.
We achieved our highest-ever EBITDA of INR 77 crores, expanded margins, and closed the quarter with a net cash position of INR 273 crores while investing in digital transformation and talent capability. With improved demand visibility, favorable tailwinds from the GST reforms, and strong execution across business lines, we remain confident of sustaining our growth momentum into the second half of the year. Our focus will remain on operational excellence, capital efficiency, and AI-led productivity as we continue building Quess into future-ready technology-enabled workforce solutions leader. Thank you for your time and continued support. With that, I will hand over the call to the moderator to take your questions. Thank you.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use hands up while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is the line of Deep Shah from B&K Securities. Please go ahead.
Yeah, hi. Thanks for the opportunity. The first question is around the headcount, guys. I heard you mention that in beta with the festive you saw manufacturing FS do very well. Any idea or any guidance you give on where you see this trend continuing? Because if this continues, then I think it is quite healthy for us as a company. That is first. Second is on the Professional Staffing segment. You did mention that we rationalized some low-margin contracts. Nonetheless, these margins that we achieved are first in our history, if I recollect. Any ballpark figure you would like to show that this is where we could normalize, or you think that these margins are not sustainable? Any more clarity would be very useful. Thank you.
Thanks, Deep, for your question. For the first half of the question on General Staffing, I would ask Lohit and Nitin to answer on it. For the Professional Staffing question, I will ask Kapil to pitch in, please.
Good morning, how are you? As far as the question is concerned, you would note that for the last two or three quarters, we were very fixated to take care of the one-off event which happened in Q4 and come back strongly with both the headcount addition, the revenue achievement, as well as then over the trajectory on the margin category. There were three broad pillars on which the first half of the year was built. As far as GS is concerned, the pillar was that we have to recover on the volume for the 38,000-40,000 that Guru had spoken about from last financial year. On the Professional Staffing, it was maximizing our intent with the GCCs and the margin expansion and overseas, it was to come back to a trajectory of growth irrespective of the headwinds of the Singapore market.
One, all three units have delivered in first half of the year, a solid platform for what we had set out for each one of them. Now, coming specifically to your question on seasonality. As you know, this time the season got certain tailwinds. There has been a reduction in repo rates a few times. There has been a reduction in income tax for people up to INR 100,000, which gives more consumption in the hands of the people, as well as the big announcement of GST 2.0, which happens just before the season kicking. We were very confident that if we look out for opportunities, and those opportunities were delivered by both our sourcing team and technology. I will bring in Nitin Dave, the CEO for the staffing business, to speak more about this, and that is what the team has been able to maximize.
Looking out into Q3, I would like to basically say that we would look at H2 rather than just simply Q3, because Q3 also comes at the end of-- It starts with the end of Diwali and then goes into the season of Christmas and New Year's. So we are confident that we will be able to repeat our H1 performance into H2, but I will give it to Nitin to broadly speak about the measures that the business has taken to ensure this. I will come back on the Professional Staffing and then give it to Kapil.
Good morning, Deep. This is Nitin. Deep, I would like to focus on the sourcing engine that we have built and also the sales engine that we have to deliver. If you look at every year and every quarter, if you look at last three, four years, we have been delivering a net add of about 15,000 quarter on quarter. So the sales engine and sourcing engine is mature, is in a position to focus on the opportunities, as Guru said in his brief, that the open mandate at this point of time is still 27,000, and that is where we would like to focus our attention on. On a continued basis, deliver steady headcount quarter on quarter. So that is what the business is geared for.
And in terms of sourcing capabilities, technologies, we are working on that consistently. I believe we are in a position to deliver headcount consistently quarter on quarter.
Kapil, if you can answer the second half of the question on margins for Professional Staffing business.
Yes, sure. I think he spoke about revenue also, so I will answer first on the revenue front. If you see our revenue by segment, a large portion of our revenue come from the MSP programs. MSP program is we just not support client on the staff recommendation, but we also support client on cost optimization on their workforce management spend in technology area. So we build a strong talent supply chain for them, and we manage their technology spend. It is a fast-growing business for us. So one of our large MSP program has gone past 100, and that is where you see the revenue from. On gross margin front, gross margin at EBITDA front, EBITDA is combination of gross margin improvement and operational efficiency.
To add on to your point, gross margin, I think we would be able to maintain because there is no shift in the demand flow. We still see the demand in mid and senior level niches of each area. Okay. So gross margin, we will sustain. On operational efficiency point of view, we don't have any plan for further investment in ITC. So hopefully our EBITDA margin will be stable, a low double digit going forward, which means the same as what we have reported for last two quarters.
Thank you, Kapil. Any more questions, Deep?
No, this helps. Thanks, team, and all the best.
Thank you.
Thank you very much. The next question is from the line of Siddharth Zabak from IIFL Capital Services Limited. Thank you. Please go ahead.
Hi, thank you for taking my question. My question is on finance cost. I wanted to understand why your finance costs have gone up sharply this quarter despite your net debt including lease liabilities remaining almost flat.
Thank you, Siddharth. I'll take the questions. The finance cost is higher during this quarter due to increase in working capital requirement for our high margin business, which have higher credit and DSOs, notably Professional Staffing and overseas business. However, if you look on a half yearly basis, more or less the finance cost is in the similar range. Going forward, we expect the finance cost to rationalize in the coming quarters. As we've guided to the Street, the finance cost is expected to be around INR 9 crores-INR 10 crores on a quarterly basis, with approximately 50% coming from the operational interest cost and remaining from non-operational interest cost.
That was very helpful. Thank you and best of luck for the coming quarters.
Thank you, Siddharth.
Thank you very much. The next question is from the line of Amit Chandra, HDFC Securities. Please go ahead.
Yeah. Thanks for the opportunity. My first question is on the General Staffing business. We have seen that there is now improvement in terms of net adds and also in terms of gross additions. We are also seeing that the sourcing has improving for us, wherein now 41% is now from the sourcing requirements versus the transfer. But it is not being reflected in terms of the margins that we are seeing. Also in terms of PAPM, how the PAPM split has been and also in terms of the net additions, if you can split it between how the split has been between Tier 1 and Tier 2 cities because generally Tier 2 hirings have more gross margins. The mix is also changing in terms of total additions.
Also in terms of the bonus payoffs in quarter three, how do you see that panning out? Can we see a dip in margins in the coming quarters?
Okay. I'll read for you the sequence. To start with PAPM, we are ranging in the same range around INR 670- INR 680. We continue to be in the same range. That's the first question that you had. Coming back to sourcing is a very intense activity. If you look at one of the criteria we have been calling out every quarter in terms of our core to associate is also slightly dropping. Which is cautiously we are investing more on sourcing because our demand as I said, almost about 37% is from Tier 3 and Tier 4 location and about 33% comes from Tier 1. Then there's a mid tier between these two.
If I take between Tier 2, Tier 4, Tier 5, almost 67% of our demand comes from there and there has to be a very deep ground activity that has to be done. We have to create alternate channels, we have to create the tech in terms of sourcing. From that standpoint, we will continue to invest and it is important if you look at it is also resulting in our onboard 41% coming through sourcing. Whereas if I go three years ago, there was more transfer and approximately 13% was coming through sourcing. That is slowly changing. We continue to do that because hiring on time and timely deployment is something which is extremely critical for staffing. Let me hand over to Lohit to handle the second part of the question on bonus which will proportionately can influence.
Amit, yeah. Thanks for the question. Like Guru explained, this is the start of the activity which we had initiated almost seven to eight months ago. When we saw the BFSI decline, we started to intensify both our sales acumen in segments like manufacturing, CRT, and the others as well as delivery capability, fulfillment capability and which is what is reflective as far as the investment is concerned. We are still at a very early and nascent stage for technology or the platformized-led AI activities to start reflecting. That at some point will start reflecting. I do not want to give a guidance on that as yet. However, coming back to your specific point on bonus.
Yes, whenever there is Diwali, the month of Diwali which in this case was the first month of Q3 as well as the second month which would be November in this case, would both have certain passthroughs. Passthroughs as you know in the Collect & Pay flat fee business does not give or does not yield extra gross margin. That would be a temporary glitch. It practically happens everywhere that approximately INR 120 crore- INR 150 crore of passthrough values could come in this particular quarter. Other than that, we do not see any major shift as far as the mix is concerned.
I think we had made one point about two or three quarters ago where we said we would like to have a healthy state where General Staffing on a growing base contributes 50% of the profitability of that company and the higher margins international at +6% and Professional Staffing at 11%, 12% contributes 50%. We have got to that point. Now is the time for us to deepen that for H2 and thereof.
Okay. In terms of more structural levers for the margin expansion in the General Staffing business, we thought that higher sourcing and automation and expansion into Tier 2s would eventually lead to higher gross margins. Apart from that, what are the other levers we are also exploring in terms of one year element perspective to expand margins in the General Staffing business or apart from the change in mix that are hiring in the General Staffing side in segments? Apart from that, PAPM expansion is possible or it is actually going to be at similar levels that we are having right now?
Yeah, thanks for that question. There are two parts to entire Quess ecosystem. One is the overall mix, which is General Staffing, Professional Staffing. Internationally, we have elaborated on that. Within General Staffing also, there is a mix, and let me talk about that mix. That mix could today be divided into two broad fashions within the business, and then I will talk about two emerging businesses. Within the existing business, there is the traditional CRT, which is the consumer-led business, and the BFSI. Both of these are very large volume, flat fee, and Collect & Pay kind of relationships, where less domination of sourcing happens and hence less investment by that nature. Now you come to the other category of the business, which for the last three years we were extremely confident about, and that has yielded in the results that today we have 77,000 people in the manufacturing apprenticeship ecosystem.
This has become our third largest vertical, but we continue to grow 30%+ year-on-year on this, while the other stable business grew about 15% year-on-year. This business, the manufacturing-led business, yields a higher gross margin than the traditional BFSI and the consumer business. However, on a book of 470,000, we are currently 77,000, but growing at 30% for the last three years. So as that mix continues to change, you will see one shift happening. Now I come to the two emerging businesses within General Staffing, which have been incubated just in the last one year. Between the two businesses today, at an EBITDA margin level, the contribution from them in a quarter is today less than 8%. These two businesses primarily are the VAS business, the value-added services, staffing plus business backed up by technology, and the second business is the construction business.
Both of these businesses have much higher gross margin, as well as they have much higher EBITDA margin. But like I said, the contribution to the overall General Staffing book today is less than 8%, and that is something where our leadership team, as well as our team, have made a lot of investments, and we continue to look forward into the next one to three years on having higher mix from there as well.
Okay. Thanks for the answer, sir. Next, the second part of the question would be on the Professional Staffing. There also, it is encouraging to see the margin expansion and focus on high-margin business. But in terms of the existing book of business, we are seeing some recovery in the IT services part, which has been subdued over a longer period of time. So within the verticals within Professional Staffing, if you can give some color that, what is contributing, because the large part of the growth earlier was largely being contributed by the rise of the GCCs. Are you seeing some shifts or some kind of growth emerging in other verticals as well in Professional Staffing?
Sure. Absolutely. I think after eight or nine quarters, IT services companies has seen a good, healthy headcount and barring one or two market leader, I think across all IT services companies, we have seen the positive net outcome and very healthy headcount. We see it will have a direct impact on our business. We do work with a lot of IT services companies, and our association with them is a decade old, before GCC came to India. We still work. If you see our revenue by sector, a large portion of our revenue still comes from the IT services and enterprises, non-IT enterprises, and definitely it will be a boost to our performance.
Okay. Okay, sir. Thank you and all the best.
Thank you very much. The next question in the line of Nikhil Choudhary from Nuvama. Please go ahead.
Hey. Hi. Thanks for the opportunity. My first question is on Professional Staffing. While we have highlighted that we are focusing on higher margin clients, but in this quarter, we have also seen decline in contribution from top clients. Profit percent contribution declined by 5%. Is it that we are refocusing on some of the large clients, which is leading to lesser improvement in profitability? That is one. Second is, where we are in the journey of the television contribution from top clients, which is helping us in delivering higher margins.
Personally, we always believe in diversified growth. If you see what is happening, while most of our growth is coming from the GCC, but GCC also, if you see growth at micro level, you will realize that there are GCCs which came to India five years back or 10 years back. These are mature GCCs. There is another wave of new GCCs which has come in last three years. Both are behaving very differently. A large GCC, vintage relationship, we are seeing cost optimization is going on. There is a cost specialization. There is automation going on. There is AI drive adoption. New GCC from day one is adopting this economics.
There is a mix, and that is where you see the mix from top 10 clients and next 40 clients is changing very fast, but I think it is healthy signs for all of us.
Okay, sir. The second part of the question was that, can we expect this to continue, the lesser growth in lesser slowdown further while margin might remain strong?
I think both ways for at least till another quarter the trends should continue. Once starting from January, we see once the new budget allocation planning happens, GCC will get more project, more budget from their headquarter.
Got it. Got it, sir. Second, just want to understand your comment on H2 growth will be similar to H1. So H1, we have delivered about 1.6% year-over-year growth. So what we meant when we said that H2 will be similar to H1? We expect more similar type of growth. Any timeline of, let's say, achieving double-digit revenue growth in the?
Nikhil, can you just repeat your question once again?
Yeah. I think there was one comment where we have in General Staffing, H2 growth will be similar to H1, if I heard it correctly. In H1, we have delivered 1.6% approximately YoY growth. So what should we expect from H2 growth and when can we achieve double-digit revenue growth in General Staffing?
Coming to your question, basically, when we have delivered a 1.6%, basically, when you look at it sequentially, in Q4 FY 2025, there was an NBFC rundown of around 38,000 associates. That is still less than the Q1 of FY 2025. When you look on a year-on-year basis, our growth would look subdued. When you look at it as a sequential basis, we have been growing. Going forward, as we said that in H2, we should consider to deliver similar kind of growth in headcount. With 21,000 that we delivered net adds in this quarter, going forward, at least we should do around 10,000-15,000 net adds in the coming quarters, which I think Nitin has already alluded in his speech.
On a year-on-year basis, we should be able to deliver growth in the headcount as well as revenue on a year-on-year basis, as well as EBITDA profitability despite losing 38,000 associates in Q4 of FY 2025.
Yeah.
Hope that answers your question.
Yeah. Thanks a lot. Just last one on digital platform. What would be the credit rate losses going ahead? I mean, will it continue the similar losses even going ahead?
If you look at both the revenue and losses are very negligible. It is about INR 1 crore per quarter. The other way to look at it, Nikhil, is number of users who have come onto the platform, which has gone to now about 12.9 million. What we are trying to build up is, of course, this will be definitely used for our own internal hiring purpose. We want to now accelerate at least about 15%-20% coming through this platform to accelerate our sourcing capability. We are seeing from the perspective of user actively coming onto the platform. If you look at even our HR user base has gone from when we started last year, we were about 5.5 million. That is now closed to about 5.6 million. It is good to see the active user base is going up.
We will slowly start monetizing as we move forward.
Got it. That is a separate side. Thanks for that.
Both the revenue and the loss is very negligible to the overall workforce revenue.
Noted, sir. Thanks, sir.
Thank you very much. The next question is from the line of Dipesh Mehta from Emkay Global. Please go ahead.
Yeah. Thanks for the opportunity. A couple of questions. First, about the operating cash flow. If I look OCF in H1, it is I think 35%, 40% down compared to last year, even though our EBITDA has grown. So if you can provide some sense about operating cash flow, even though you indicated in your operating credit, OCF to EBITDA is 108%, 110% kind of thing. But when I look at console level, it is weak. That is question one. Second question is effective tax rate. How one should look at it? This quarter is around 10%. Considering now demerger-related thing as well as business mix change, what we are observing from profit contribution perspective, what would be the effective tax rate one should look at it? Third question is about Professional Staffing. You indicated about margin improvement and all those things.
But if I look, let's say, an exit from low margin business. Ideally, low margin business exit should reflect into better revenue per associate. If I look your number, revenue per associate declined almost 20% sequentially, even though your margin has expanded. But this is bit confusing. If you can throw some detail around it, how to understand these two nuances when you exit from low margin, but your revenue per associate continue to decline. And last question is about Originate. If you can throw us some update on our GCC offering. Thank you.
Thank you, Dipesh. Thanks for your question. I will take a question on tax state, post which Guru will answer your question on OCF. Kapil will answer your question on revenue per associate in professional staffing, as well as answer your question on Originate business. Coming to tax state, we are getting higher contribution from our higher margin business. On a modeling basis, I would advise you that the due tax rate or the tax incidence should be in the range of 10%-12%. As compared to previously, which was we had guided to 5%, but I think the new normal on the tax rate is around 10% for our business as the growth goes forward. Kapil, can you answer the question on Professional Staffing on the contribution of revenue per associate in Professional Staffing, as well as some inputs on Origin?
Sure. Dipesh, just to explain to you again, I did earlier also. MSP is a pass-through business where we manage clients' spend on workforce management in technology space. The headcount is not on our payroll. What we have lost is only revenue. We didn't lose the headcount, and that is where if you calculate headcount is the same and the revenue is dropped, I think that is where you see drop per associate. But actually our revenue, only revenue has dropped, pass-through revenue. And our per associate revenue actually is getting improved quarter on quarter. Margin per associate is getting improved quarter on quarter.
Sure.
Dipesh, other question with regard to specific to OCF. See, it's not straight comparable because last year we had a tax refund of about INR 129 crores and this year we are working on a Tier 2 get there, but where we have closed to is about 109%, which is exceptionally high considering few advance salaries that we would have collected and paid just on the last year before Diwali and all of that. But otherwise, anywhere the range that we should be able to be should be anywhere between about 80%-90%. That's the range that we will be able to sustain. But last time was one odd where we had INR 129 crore of tax refund. Dipesh, does that answer your question?
Dipesh, does that answer your question on OCF?
Yeah, that answers. You are indicating 80% to 90% conversion once you look at it, and because of lack of refund, that number is lower in H1 compared to last year.
There could be refund this year as well, but we are not too sure at the moment. As it comes, it gets added on. Yeah.
Understood.
As we have guided to the street, for the full year, we should be in the range of 70% for EBITDA to OCF conversion.
70% or 80%- 90%? Because I think Guru said 80%- 90%.
Depends on whatever income tax refund that we are able to credit, then it can go that range. But on an operational business as a basis, we can park around 70%-80%.
Understood. I think two questions, one follow-up on the Professional Staffing. Can you give the number of pass-through? Because I think that is one of the reason which you alluded, which led to revenue per associate decline. Do you expect that MSP, I think, which you indicated managed service contract, likely to start again in quarter three, which can have some implication on this metric, and I think Origin is unanswered. Thanks.
If you can just give some input on Origin business.
Yeah. Two specific questions that you asked. One, you said, what was the number of this MSP customer that got sunsetted? It's approximately about INR 10 crores per month or for a full quarter, it will be roughly about INR 30 crores. That's where, like Kapil mentioned, because these are contractors of our suppliers, not contractors of ours, and hence don't reflect in our headcount. But as we are the MSP provider, it reflects in our revenue number. That's why you were finding that anomaly. Reason that our team always goes out for these lucrative large MSP is MSP also gives you an enablement to provide your technology, your platform, and also get what is called participating MSP benefit. As a participating MSP benefit, you generally have a higher market share with that customer between 25%-40% at least.
So will we continue to look at global deals in MSP when the customer wants to play in India? Yes, from time to time, we continue to keep looking at that, and which is why, in spite of the fact that our business yielded 12%+ EBITDA margin, Kapil has said that he would like to continue on the range of 11%-12%. So we have factored for that is one. What was this? Origin. Yeah. On Origin, we have already successfully not just bagged, but we have also executed and activated one GCC. There are another two which are at the final legal stages. This has a very long gestation period for the simple reason that the sales cycle itself, the presale cycle itself can be between three to six months.
Another three months of architecting how you will execute, and then it could take anywhere between two to three months to do your legal agreements from the clients because they are setting up shop in your country for the very first time, and that has to be all managed by us. And obviously, premises has to be taken, so infra has to be built and activated. Hence GCC by nature is a slightly longish gestation period when it comes to from the time that we start the sales cycle to the time that we rectify. We feel that this quarter, these two legal agreements will go live and then from the delivery stage and they will start
Marginally contributing to our numbers. But by Q4, they will have slightly better contribution to the numbers.
Thank you.
Thank you very much. The next question is from the line of Aashaka from Sameeksha Capital. Please go ahead.
Hello. My question was, can you please provide information on the current status of tax and PF litigation?
Aashaka, your line is not clear. Can you
Sorry.
It's echoing. Can you repeat?
Yeah. Is this better now?
Yes.
Sure. Can you please provide more information on the current status of tax and PF litigation?
Tax and PF litigation.
PF. PF litigation.
As far as the tax goes, we don't have any update on it. The next hearing for the ITAT is on December 1st, 2025. Probably, we should be able to give you some more update the next quarter.
Okay. Thank you. Thank you for that.
Thank you very much. The next question is from the line of Sankaranarayanan S from ithoughtPMS. Please go ahead.
Good morning. Apologies if this question is already asked by any of our previous participants.
Sankar, if you can be a little louder.
Am I audible now?
Yeah, better.
Apologies if this question was asked by any other participant. What is happening to our CRT vertical within General Staffing? Why its contribution is falling here? Because our BFSI kind of loss and that has impacted, but from a CRT sector perspective, what is happening there?
Consumer retail. I would ask Nitin to give some inputs on CRT, but overall, we don't see any decline there. The concentration, basically the contribution of CRT business in our overall business has come off from 50% to round about 29% in this quarter. Some comment on that aspect.
What is happening is that if you look at quarter-on-quarter, our maximum growth has come from the manufacturing segments. If you look at our manufacturing segment at this point of time, it is growing at about 15% quarter-on-quarter. What is happening in the CRT, it is a far more mature vertical for us, where the growth is more steady. Whereas some of the other segments like manufacturing are certainly growing faster. But overall, the pipeline at CRT is healthy. The sourcing that we are doing in the CRT vertical is also healthy. What is happening is that the telecom business, which also forms a part of the CRT vertical, is growing slower. Actually it is coming down. The telecom vertical at this point of time is not hiring. The number of telecom operators are also limited.
It's not that you can grow those verticals. But if you look at smaller practices within the CRT verticals like the retail, the e-commerce, they have definitely grown. But the telecom practice has gone down, and on top of that, the manufacturing is certainly growing faster. It's the fastest-growing practice for us at this point of time.
Sankar, you got it right. There's a typo error on that. The CRT is still 48% in this quarter. It's not 43%.
Got it. I am seeing from a General Staffing population. That is probably why I mentioned 43%.
Okay. Got it.
One more question. Since we are a market leader in the central staffing business, what is your expected headcount growth for the next three to five years?
Sankar, this question is something that we answered, and I would like to repeat that. At this point of time, we have a very steady sourcing and a sales engine in place, which is designed to cater to the requirements of all the segments, be it the CRT, manufacturing, as well as BFSI in all parts of the country. What we see is, and what we have been doing is for the last three years, we have been adding about 3,000 headcount year-on-year. We would be able to, on a steady basis, deliver growing headcount year-on-year. That is our thought process, that we fine-tune our engine, strengthen them, and continuously deliver headcount growth quarter-on-quarter. That is our thought process as far as next three to five years are concerned in the General Staffing business.
Just to add a little more there. At 483,000 level, Sankar, my headcount will be globally third largest by headcount. Obviously, the aspiration is to ramp towards becoming globally number one.
Okay.
Okay. Now Coordinator?
Yes, sir. The next question is from the line of Gaurav from Capital Farming Consultants. Please go ahead.
Gaurav, hi. You are there online?
Mr. Gaurav? Seems like the participant is not there. The next question is from the line of Shivang from Emkay . Please go ahead.
Hi, am I audible?
Yeah, Shivang. Yes.
Yeah. Since the 13% Q4 last year, can you give me a sense of YoY growth for Q4 this year?
Sorry, what is it that you're looking at?
YoY growth in headcount for Q4.
Yeah. As we've already stated that in the next two quarters, we should be able to do a net addition of around 10,000-15,000 in the coming two quarters. I think we should be aiming the year with a single-digit growth in headcount on a yearly basis.
Okay, thank you.
Thank you. The next question is from the line of Zaki Nasser from Nasser Investments. Please go ahead.
Am I audible?
Yes, sir. You are audible.
Sir, I would have a small question on the other expenses aspect. Other expenses have dropped to INR 94 crores from INR 169 crores on a September to September basis. Is this an accounting term whereby part of the payment goes through our subcontractors, which is directly reflected in our books? How does this work, sir?
You are right, Zaki. As we discussed that we have rationalized our low-margin business in MSP. There is a decline in revenue in the Professional Staffing business and decline in other expenses, whereas the cost for the subcontractor charges.
Okay. The subcontractor charges will get converted into employee benefit expenses broadly. Is it right, sir?
If we get-
It is reflected.
I am saying, if we let go of these MSP contracts, subcontractor expenses also will go in the.
The percentage of expenses will get converted from other expenses into employee charges?
No, it will not.
No, it will not actually.
It will not. If you look at it's sequential. When we downsize the program MSP, to that extent, the direct cost also comes down, Zaki. That's the point which Kushal was trying to explain. It does not convert into employee.
The other expenses have gone up. The subcontracting expenses actually goes.
Okay. Thank you, sir.
Thank you.
Thank you very much. The next question is from the line of [inaudible] . Please go ahead.
Yeah, good morning. Am I audible?
Yes.
Yes. Audible.
Yeah, thank you for the opportunity. Sir, my question was connected to the cash. What is the company's policy like? What is the dynamic deciding of what you would do? 70% growth as cash is actually like delivery medicine or reinvestment. What are your plans?
We have defined a stated policy. First of all, the business is a cash-generating-- as an entity, we are a cash-generating entity, and we have a clear dividend policy that we have put across. Up to 75%, we will work in the form of dividends. It is something that we have clearly put across.
Thank you. All the best for the future.
Yeah.
As there are no further questions, I would now like to hand the conference over to management for closing comments. Thank you.
Thanks, everyone, for joining us today for the earnings call. All your questions and feedback has always been valuable to us. We appreciate your continued interest and support, and I sincerely look forward catching up with you all. Thank you so much for joining us today again.
Thank you very much. On behalf of IIFL Capital Services Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.
Thank you very much