Ladies and gentlemen, good day and welcome to the Quess Corp Limited Q1 FY 2025 earnings conference call hosted by IIFL Securities Limited. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I will hand the conference over to Mr. Balaji Subramanian from IIFL Securities Limited. Thank you, and over to you, sir.
Thank you, Neha. Ladies and gentlemen, good morning, and thank you for joining us on the post-results conference call for Quess Corp. It is my pleasure to introduce the senior management team of Quess who are here with us today to discuss the results. We have Mr. Guruprasad Srinivasan, ED and Group CEO; Mr. Kamal Pal Hoda, Group CFO; Mr. Kushal Maheshwari, Head Investor Relations and Strategic Finance; Mr. Pinaki Kar, President, Global Technology Solutions; Mr. Anand Sundarraj, President, OAM; and Mr. Sekhar Garisa, President, Product-led Businesses. 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, Balaji. Good morning, everyone, and thank you for joining our Q1 FY 2025 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 policies. All forward-looking statements are subject to economic growth or other risks faced by the company. 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 today. We started fiscal 2025 in a robust way and delivered a healthy performance during the quarter. Though Q1 historically has been seasonally the weakest quarter, this quarter marks the first time we have achieved a revenue run rate of INR 5,000 crores and a resilient Q1 performance with a substantial headcount addition over 30,000 + associates.
EBITDA grew over year-on-year basis by 19% and saw a sequential dip of 6% over Q4 due to a seasonal slowdown in our higher margin OAM and GTS businesses. In addition to business seasonality, the impact of which is also absorbed in Q1, we expect margins to improve as these businesses recover from Q2 onwards. Key financial highlights for the quarter. We added about 30,000 associates, and the headcount stands at 597,000 associates during the quarter.
We recorded a consolidated revenue of INR 5,003 crores. We just crossed the INR 5,000 crores milestone with a growth of 9% on year-on-year basis. We delivered an EBITDA of INR 184 crores, a growth of 19% year-on-year. Year-on-year improvement in margins was led by reduction in Foundit burn with a sales growth and optimized market spends. Improvement in OAM margins through higher contribution by telecom and infra business and profitability focus in other businesses.
We continue to implement cost reduction and productivity improvement initiatives to optimize our business operations further. In preparation for announced demerger of Quess, we are also setting up leadership and internal processes. In this regard, I am pleased to welcome Gurmeet Chahal, who has joined us as CEO of Quess GTS Platform and will eventually lead a digitized entity. He has been early proponent of integrated BPO and tech offerings throughout his career.
Under his guidance, the GTS platform will expand its global BPM and IT services footprint. Let me talk specific updates by platform. Starting with workforce management, the platform headcount reached 485,000. This includes people who are also serving notice period, which is about 32,000 during the quarter. Adding a healthy 30,796 associates during the quarter.
Addition in Q1 is more than what we added in last two quarters, that is, combined of Q3 and Q4, we have added in Q1 in itself. Revenue growth for a period was about 12% year-on-year. EBITDA margin declined to 2.4% as the business mix tilted towards robust addition from general staffing business against modest growth coming out of IT staffing and overseas staffing. The platform added 91 new contracts during the quarter with an annual contract value of INR 510 crores. Let me move on specific to the business.
Moving on to general staffing. The business added 29,432 associates by headcount during the quarter led by logistic, consumer retail, and telecom, and manufacturing. The business started the year on a very strong note by adding 82 new logos in Q1 in itself. Over the last years, manufacturing sector has been robust in hiring, and most of our efforts have collectively capitalized the momentum in this space. However, hiring in IT sector was slowed down during the quarter with only 4,000 net add as a free flow of talent across was disrupted due to general elections. With strong open mandate and internal capability, this sector will be a key focus driver as we move forward. Quess has been the front runner in enhancing its sourcing through job spots.
We did announce this last quarter, and this is a process where digitally we enable people located within the proximity of distance to the key manufacturing clusters designed to streamline recruitment for prospective job seekers. We recently launched our third job spot in Jharkhand after Hosur in Tamil Nadu and Narsapura in Bengaluru, and we are witnessing good traction. We are now looking to expand into the supplier states like U.P., Bihar, Odisha, Jharkhand in the coming quarters. We have invested in leadership to strengthen our vertical strategy approach, allowing us to focus more on customer acquisition, retention, fulfillment specific to this segment. Our widespread geography reach is a testament to our sourcing and deployment capabilities. More than 70% of our graph additions during the quarter were from Tier 2 and Tier 3 or beyond Tier 2 regions.
Engagement through our digital offering continues as we launched dash+, which provides learning and development, skilling and assessment, and financial inclusion products at a click of a button to our associates. Coming specific to IT staffing business, we experienced a positive trend in the headcount after few quarters of decline. We added over 300 associates. We anticipate to continue this growth trajectory as we have strengthened our GCC capabilities. The IT industry is expected to recover in second half, so we have already seen some green shoots in Q1, so we expect this to recover a bit in second half. GCC witnessed strong hiring trends, and we are now have 69% of our revenue from GCC.
Our focused strategy to leverage GCC opportunities has resulted in healthy margins for IT staffing and has paved a path towards capturing a larger market share in GCC staffing space, and our open mandate levels are at about 1,500 compared to Q4. We have grown up by 36%. Moving on to Global Technology Solutions platform. GTS registered a revenue growth of 1% quarter-on-quarter on a seasonally larger Q4 base in connect and offset business. The quarter's EBITDA margin is 17.5%, well in line with sustainable range between 17%-18% band. The highlight specific to the platform, moving on to the CLM business. This business continues to witness healthy growth with 20% year-on-year and 7% sequential growth led by domestic and international mix. Offset CXM vertical delivered a strong top-line growth and a higher international business reliance.
The non-voice DPM business saw a dip during the quarter. Collection business actively peaked in Q4, followed by a seasonal slowdown in Q1 FY 2025. Likewise, the ESM vertical in platform services experienced a sequential decline due to year-end one-time poaching activity in Q4. Overall, ESM business remains strong with 4.1 million pay stubs processed during the quarter, which translates to 10% year-on-year growth. Overall, the platform closed the order book at almost INR 82 crore ACV, adding 42 new logos to the key drivers where BFSI and retail segment continues to be the key driver. Moving on to Operating Asset Management. Following year-long initiatives to enhance productivity and margin over past years, the OAM platform grew 9% despite of seasonal food and beverage and telecom network maintenance businesses slowdown.
The platform recorded a year-on-year margin improvement of 30 basis points with increased contribution from telecom, infra, industrial, O&M businesses. However, there was a sequential dip in margin owing to loss of business due to seasonality in food and telecom business on back of 5G deployment and slowdown in that space. I would like to give you some highlights on OAM business. IFMS added 23 new logos with an ACV of INR 50 crore predominantly coming from logistics, e-commerce and industrial are the key drivers where the additions came from. While security services realization were nearly flattish, the business registered appreciable margin expansion as we rationalize few low margin contracts in this quarter. Telecom infra registered a marginal growth sequentially as 5G deployment was seasonally slower in Q1.
We have invested in sales and leadership to enable us to have a vertical sharper focus on profitability as we move forward. Moving on to product-led business. The revenue and EBITDA in this segment excludes our Breakfix business, Qdigi, which we divested in Q4. Foundit saw a growth of 30% year-on-year and revenue growth of 7% year-on-year. Sales growth of 30% year-on-year and revenue growth of 7% year-on-year. Foundit has significantly reduced its cash burn. Our operational metrics are up 12% sequentially on recruiter base consumption, which gives us confidence as job postings are up by 54% quarter-on-quarter. Candidate profile updates are up by 86% quarter-on-quarter, and CSAT remains healthy at 91%. We are confident of healthy 25%+ top-line growth with a reduced cash burn for the year. Moving on to organization updates.
I am pleased to share that our workplace has been recognized as a Great Place to Work for the fifth consecutive year with a rank of 32nd place, our highest ever. As a people-first organization, this achievement reflects our collective dedication to foster a culture of respect, growth, and innovation. Our demerger plan is on track. We expect approval by stock exchange, after which NCLT proceeding will commence.
Internally, we concurrently enhancing our leadership refining process and bolstering operational capabilities to empower each entity to establish a leadership position in their respective sectors after they demerge. Before concluding, I would like to highlight few factors that will be instrumental in driving growth at Quess over the next few quarters. The government's focus on job and employment and financial assistance to companies adding job will give Quess, India's largest domestic employer, many opportunities for growth.
The private sector investment cycle should kick in with employment and job creation being on everybody's mind, creating more job opportunities for business services provider like us. The strengthening of leadership, particularly in GTS segment, is expected to give our BPM business more tailwind as it intensifies its go-to-market approach. The overall organization strengthening and optimizing that Quess has undertaken in last few months is showing result, and we expect this to continue and leading up to the demerger as we get closer there. Coming off a robust start to the year, we are looking forward to be the fiscal performance this year before the demerger. This will ever be the best year for us before we get into the demerger is being implemented. With this, I will now hand over to Kamal for financial updates. Over to you, Kamal.
Thank you, Guru. I will first take you through financial numbers before getting into segmental performance and other profit updates. We delivered record revenue of INR 5,003 crores during the period with a growth of 9% year-on-year and 2% quarter-on-quarter. If we normalize the divestment of Qdigi done in Q4 of last year, revenue growth would be at 11% year-on-year and 4% quarter-on-quarter. EBITDA stands at INR 184 crores, a growth of 19% year-on-year and a decline of 6% quarter-on-quarter. Our operating margins are at 3.7%, which is 33 basis points higher on a year-on-year basis, driven by high contributions from margin-accretive businesses in GTS and OAM platforms and reduction in burn-in Foundit business.
On a sequential basis, there is a 30 basis points decline due to seasonality in few of our businesses like food and beverages and telecom services, and also annual wage increase for our core employees. Profit after tax increased by 132% year-on-year and 14% quarter-on-quarter to INR 112 crore. Our PAT growth is significantly higher than EBITDA growth because of higher other income, lower interest costs, and also includes a one-time exceptional gain of INR 17 crore from divestment of our labor law compliance by our subsidiary Allsec Technologies.
EPS for the quarter is INR 6.9 per share, 116% year-on-year growth and a 10% quarter-on-quarter growth, in line with the PAT growth. Our commitment to cash management and debt repayment continued in the quarter as we repaid close to INR 100 crore of debt, which has brought down our gross debt position under INR 300 crore. Our net cash position has also improved by 11% sequentially. Moving on to platform-wise updates. Starting with workforce management, we delivered a top line of INR 3,622 crore, which is up 12% year-on-year and 4% quarter-on-quarter, led by headcount and growth in general staffing business and IT staffing supported by GCC hiring.
EBITDA is at INR 89 crore, grew 6% year-on-year but declined 3% sequentially. EBITDA margin has seen a 18 basis points drop sequentially to 2.44% due to wage inflation and higher business mix of general staffing vis-à-vis professional staffing. With IT staffing gaining momentum and focus on value-added services in general staffing, we expect margin improvement in subsequent quarters. Moving on to Global Technology Solutions platform. The platform clocked a revenue of INR 610 crore, an increase of 8% year-on-year and 1% quarter-on-quarter.
Revenue was nearly flat sequentially due to higher base caused by year-end activities in Q4. EBITDA is at INR 107 crore, a growth of 7% year-on-year and a decrease of 6% quarter-on-quarter. Consequently, EBITDA margins were at 17.5%. Platform and CLM business delivered good performance, and our focus remains on developing margin-accretive service lines for the platform. Moving on to operating asset management platform. The platform delivered a revenue of INR 733 crore, a growth of 6% year-on-year and 3% quarter-on-quarter. Growth was led by telecom infra and industrials on year-on-year basis, while IFMS and industrials were key drivers sequentially. Segment EBITDA is at INR 35 crore with a growth of 14% year-on-year and a sequential decline of 9%.
EBITDA margin at 4.8% is an increase of 33 basis points on a year-on-year basis, driven by higher contributions from telecom business and rationalization of low margin accounts in the security business. However, margins declined sequentially by 64 basis points owing to seasonality in high margin businesses like food and beverages and telecom infra. In the product-led business, adjusted for our divestment in Qdigi, revenue for the quarter was INR 39 crore, a growth of 6% year-on-year. Foundit sales growth is robust at 30% year-on-year. EBITDA was at a negative INR 8 crore while on a year-on-year basis, there is a steep improvement in cash burn levels owing to strong sales growth and optimized marketing spends in Foundit. There's an increased burn quarter-on-quarter mainly due to higher marketing spends. Moving on to corporate updates. I'll start off with tax-related matters.
As earlier notified on the stock exchange, we received an income tax refund of INR 107 crores for FY 2018-2019. Additionally, DRP proceedings for FY 2019-2020 have also been completed. In line with the previous orders of FY 2017-2018 and FY 2018-2019, deductions under the principal matters, that is Section 80JJAA and Goodwill have been disallowed. We believe that the tax treatments availed by the company are valid, and we intend to contest this position and the interpretative stance on these sections on merits.
On updates regarding the demerger, we are progressing on track towards the proposed three-way demerger of Quess Corp. We are enhancing our leadership and boosting operational capabilities to empower each entity to establish a leadership position in their respective sectors after the demerger. Post approval by the stock exchange, we shall be filing the application with NCLT.
The Union Budget recommendation presented a forward-looking approach towards generating formal employment with key emphasis on social security and skilling. These initiatives, coupled with an increased budgetary allocation towards PLI, Mudra schemes for MSMEs and CapEx, capital expenditures, will create many employment opportunities in the formal sector. As one of the leading private sector employers, we are optimistic about the budget initiatives towards accelerating India's formal job creation, enhancing employability through skill development and education. With this, I conclude our financial results and pass it back to the moderator for taking 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 your touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Deep Shah from B&K Securities. Please go ahead.
Yeah, hi. Good morning. Thanks for the opportunity. Sir, the first question is around the higher share of ITeS that you have reported in the domestic IT staffing segment in your presentation. Is it possible to give the headcount here? This is to actually better understand whether there is a net headcount improvement, IT has bottomed out, or it is just a mix change.
Sure. Deep, hi. A, we have seen a net headcount addition growth in Q1 in IT, specifically in IT staffing in India. However, this business, we would love to tell this more on margin and the kind of contribution that this can bring in than rather than the headcount. This business contributes almost close to about 9.5%, 10% EBITDA to our total workforce division. However, good to see that mandate level has gone up. Compared to Q4, we were about 1,100. Now we are about 1,500, almost 36% + in terms of the mandate recovery. We again cater to largely 70% of our deployment goes to GCCs and then, of course, across all sectors in GCCs and balance towards other IT services and other IT companies. That's the breakdown. Deep, can you.
Deep, do you have any follow-up questions?
Hello.
Deep, are you online?
Hello. Hi, sir. Am I audible?
Yes. We can hear you.
Yeah. Sorry. There is some network interruption. I am saying just to reconfirm, the numbers you quoted are for specialized staffing, right? The 1,100 versus 1,500.
Professional, I mean, IT staffing, India.
Perfect. Sir, second. I heard Kamal say that how Foundit, I mean, PLB business, there was increased marketing there, and therefore the sequential increase in losses. But fair to say over the full year, we should break even in this business, especially with the sale of Qdigi now behind us?
Certain indicators that set us how we are progressing in this. If you look at our job postings are up by 76% year-on-year. The profile update has moved from 3.8 million to about 13.4 million, which is 250% up. When you are seeing both demand and supply side slowly getting active onto the platform, that gives us the confidence as to, ultimately it has to convert into revenue, and we are on the plan. I will get Sekhar to add further on to this.
Guru mentioned that specifically to your question, Deep, that the Q1 numbers are in line with the annual operating plan that we have. Whole of last year, we had a negative INR 55 crore EBITDA, and this year, the plan firmly is to turn breakeven on a full year basis.
Right. Sir, very useful. One last question, if I may. I am sure that the budget proposals are very encouraging, and we will obviously be a net beneficiary. Sir, any early guesstimates or early comments on how do you foresee the benefits of this given the trajectory scenario, would it be fair to assume that most of the benefits will be demanded back by your customer? Whatever your early thoughts are. I understand the fine print may not be out, but you are closer to the labor ministry than we are. Your early thoughts.
Absolutely. Deep, we are also driving this centrally across various others, putting a work stream around it. First of all, it is great to see so much of emphasis coming on to, specifically to workforce skilling and intensifying formal employment. I think this is a big shift towards thinking in itself, right? This further has various streams. The budget talks about certain, as part of the package, the Scheme A, Scheme B, and Scheme C impacting an individual fresher who is coming onto the job, to employers who are going to encourage freshers coming into the system and creating those employment.
Number three, specific to manufacturing and internship. Fourth one, female workforce participation, and special attention focused towards the dormitories and better living for people working in manufacturing and better stay conditions, et cetera. I think all these steps, India is going to face definitely a skill shortage. We are reinforcing on skilling. As you rightly said, we are very closer to this particular space and each one definitely, over a period of time, is expected to add about INR 4 crore jobs. We, as Quess, definitely stand to gain some portion of this, definitely.
If you look at few indicators again, the consumption in terms of FMCG, the rural consumption has gone up. It has outridden the consumption for urban, which also sets that from our trajectory, if you look at, our demand from Tier 2, Tier 3 are also increasing slowly. The CapEx investment, which is going to get into various segments, will actually encourage employment as well as our integrated facility management businesses to do more and customer lifecycle management to kick in.
We are quite happy to see these announcements, and we are also dissecting this to see how do we drive this across various streams and get closer to this in terms of working with the government, in terms of helping, being part of the implementation team as well. Kamal, you want to add in anything?
No, I think fairly covered, Guru. Deep, you are right. We also await the financial guidelines and the rules of various schemes and the implementation. As Guru said, being one of the largest employer in the country, we believe that we can partner with some of these schemes and the government for the formal job creation. We are looking forward to it during this financial year.
If I could just add one follow-up. Given that the higher watermark of salary of INR 1 lakh is tapped, would it be fair to conclude that even our GTS headcount, we could get benefit there also? Because I guess there, the competition to have headcount and therefore pass on benefits would be materially lower, or that assessment is erroneous?
You are right. Since the wage thresholds this time are higher and it is capped at INR 1 lakh, the effect of this towards all the verticals of Quess should be visible. But like I said, we will have to wait for the financial rules and the guidelines to come, and then assess as to what will be the financial impact of this for the company.
Perfect, sir. Thank you so much. Very helpful. Thank you, and all the best.
Thank you. The next question is from the line of Balaji Subramanian from IIFL Securities Limited. Please go ahead.
Congratulations on a good quarter. I have two questions. One is on the Workforce Management platform margins. I do know that you have reiterated in the past that the absolute EBITDA is the number which one should focus on. But nonetheless, I can see that after remaining steady at 2.6% for the preceding four quarters, it has dipped to 2.4% in this quarter.
Is it because of the seasonality you mentioned, and should we expect this to go back to the 2.6% levels as we move into subsequent quarters? The second question would be on the Associate-to-core ratio that you have reported for the OAM platform, I can see that there it has been slightly trending down. It used to be 107 about a year back, and now it is at 98. Any comments there and what are you doing to improve that? That would be helpful. Thank you.
Sure. Balaji, with regard to workforce management, a couple of pointers there. One is, of course, as you know, our strength in terms of sourcing and enhancing the sourcing capability has helped us to accelerate our net hiring through sourcing channel. If you look at, we have been investing in that space, and this is running up to the season between Q1, Q2, and Q3. We will continue to invest into the sourcing channel.
From that standpoint, it is by plan and by design of those investments have been made. Second, specifically for manufacturing job spots, which I did call during my speech. We are seeing good early wins coming in from these job spots. We are closer to the customer workplace. These are kind of centers which are digitally enabled for somebody to walk in and get job in 30 minutes.
We have already gone live with almost about four job spots now, and we have a few more slated. That is the other investments that we are doing specific to general staffing. Then of course, wage inflation comes into in Q1, which is a normal phenomenon. As we move forward, we will definitely recover some basis points, about 20 basis points back in margins because, A, IT staffing is opening up, and we are seeing green shows as the mandates have gone up. As we enter Q2, Q3, we will definitely see an uptick coming from there. Of course, international geographies are muted a bit.
Singapore, which is largest for us in terms of IT staffing, it is almost flat because they are running up to the elections and the number of people, expats who could be got into there is restriction in visa regime as to how many we can get in and all of that. By Q4, they should open up. If I were to look at where we are, there is definitely, I think we have subsumed the cost in Q1. As we move forward, there could be some basis points that will help us as we move forward. With regards to specifically on OAM core to associate ratio, it is a range that we have been hovering. We should not look at as a point rate number. Anywhere between 98 to 110 is a great number to be in.
That also shows the kind of productivity and efficiency that we are bringing in. We are in that range for almost about more than a year now. As we invest back into vertical strengthening, as we invest back into strengthening our vertical approach and investment in sales, if you look at OAM as a platform, we have been calling out that the only focus that this platform needs is acceleration in sales.
We have added the capacity across country in terms of strengthening our sales team, which is also reflected in their ACVs that we have got in OAM. We have signed about 27 contracts worth INR 52 crores in Q1 in itself. I think to us, I think we are not really worried about it. I think it is a good investment that we have made. It will be in a range anywhere between 95- 105. That should be the range.
Thank you. That answers my questions and all the best.
Thank you.
Thank you. The next question is from the line of Chintan from Girik Capital. Please go ahead.
Thank you for the opportunity. Am I audible?
No, Chintan, you will have to be a little louder.
Now am I audible? Sorry for that.
Yes.
Yeah. Okay. Congrats on a good set. Just coming to WFM first. On the margin front again, we had last quarter guided to guide the margins upwards to say 2.8, another 20 basis point improvement we were targeting. Now, obviously, it is understandable that this quarter is seasonally weak and a lot of skewness towards general staffing and all led to some slight dip in margins. Do you foresee that on an average or at the exit, we will start to hit improvement in margins going forward?
Chintan, as you know, we keep guiding. The best way to assess general staffing is to see how much gross margin to EBITDA conversion is happening. That is how we look at internally. We continue to still be around 67% in terms of gross margin to EBITDA because what happens in general staffing is the wage inflation. The revenue growth has a wage of almost about 70% coming in from wage increase as well as the sales mix is about 30%. That is something that you need to look at. If I were to look at overall WFM as a platform, two key events. One is IT staffing, as I said.
Opening up as we step into the further quarters will help us to expand margin a bit and the international staffing, as the borders open up, will help us to increase margin few basis point. With regard to general staffing, I think we are doing well in terms of our net adds. Q1 in itself, we have added at a platform level, if I take general staffing alone, about 29,000 headcounts that we have added. We will measure them purely by the adds that they do, and there are two types of contracts that we sign, flat fee and a percentage fee. So, collect and pay and upfront. Our collect and pay is very healthy. Almost about 80% of our contracts are the collect and pay and 20% is towards upfront.
The other indicators are perfect, but what happens in Q1 is when there is wage hike, there would be some percentage. And you will have a similar kind of reflection coming in Q3 also when there is high incentives that gets paid on a flat fee basis, it will have an impact on the margin. The best way to look at is gross margin to EBITDA conversion, and that is pretty strong and healthy.
Okay. On the working capital, when we say 80% of the business is collect and pay, and ideally, given the size of the business, we should operate at a negative carry or negative working capital kind of situation. If I say the DSO days for general staffing or the working capital days for general staffing, as you mentioned in the presentation, are 25 days, what does it entails to? It's largely the remaining part of business which requires larger capital to operate?
Yeah. See the DSO days as mentioned in the.
Hello?
Ladies and gentlemen, we have lost the management line connection. Please stay connected while we reconnect them. Thank you.
Sorry, we got logged out of the call. Chintan, are you all still there?
Yes, yes, I am here.
Yeah. Kamal will respond to you first.
Yeah. Chintan, the platform level DSO days, which I mentioned in the presentation, is 25 days. It is a combination of, obviously, the general staffing business and the other business, which is into IT staffing and international staffing, where the DSO days are higher. Within 25 days, also, there is a blend of the bill days and the unbilled days.
Okay.
In this line of business, we have got an unbilled days of also close to around 10 days or so, and the bill days is around 15. That is the break up. This will keep being in this range. It will keep moving basis the business mix of general staffing with our other businesses.
Okay. But I didn't understand because if it's collect and pay is 80 in general staffing and DSO days for general staffing is 25 days, I'm just wondering the 20% piece carries a much larger collection days. That's what my point was. Anyways, I'll jump back into for any further queries. Thank you.
Sure.
Thank you. The next question is from the line of Amit Chandra from HDFC Securities. Please go ahead.
Yes, sir. Thanks for the opportunity. In terms of the employment and skilling initiatives that has been announced in the budget, obviously, it is a positive for the staffing companies. But if you can throw some more light in terms of the various initiatives, be that Scheme A, Scheme B, and Scheme C. Obviously, it is going to push volumes, but is it also going to help us in generating some more margins from it?
Because we know it involves a lot of compliance related work in which we have to collect from the government and pass on to the employer and the employee. Are we also planning to get some extra BPM or extra form for managing these skills for the company? And also from an overall perspective around the skilling program and the internship opportunity that has been announced. When we expect these to show up in the numbers and obviously the manufacturing and the MSMEs side, which is the. Are we planning to increase our investments in this space?
Amit, I will answer this. I think there was some line disruption in between, so I think let me start with this. Stop me wherever you have any further questions. First and foremost, as I said, this has been completely focusing on formal employment creation and specific segment in terms of manufacturing, participation of women workforce, and skilling. These are four areas budget has been really focusing about.
If you further look at it has multiple packages in this, or schemes which have been created, something that is direct benefit transfer to employees. Some portion of it goes into employees directly where they are encouraged to come into the formal workforce and work for a fixed period, in the sense, work for at least minimum one year in that space. It is not only hiring and deployment, it is about holding them and getting consistency in those workforce.
I think that is where one of the scheme is focusing. The second scheme is focusing on employers' participation in terms of ensuring that we hire a fresher and we are capable of training them and deploying them into the job. I think that is the second area where employers are encouraged. The third area is where specifically focusing for the manufacturing segment as to how freshers can be hired, trained, and deployed. These are three different packages. Over and above, to encourage women workforce participation for a better living conditions, the working women hostels in collaboration with industries are being set up and it has some element of CSR fund and et cetera into it. The last one is largely, again, focusing on the skill shortage and skilling gap.
Quess being, if you look at, we are mid of this transformation of a individual journey from informal to formal. They have to pass through somebody like us, and we are in midst of this ecosystem, getting people from farm job to non-farm job or moving them from informal to formal when they start. Of course, once we hand hold and jointly between us and customers, then we become a kind of stepping stone for them to build their career as they move forward. While these are the schemes that have been announced, there is definitely a lot of challenge on the ground in terms of implementation. We have to work as a stream very close to the respective ministries. We are also doing that in terms of ensuring that we come together to implementation of this.
As Kamal said, the fine prints we will have to get into and the models have to get created. However, this is going to start from October onwards as and when the budget, the conclusion or the rollout happens. We are also working as a revenue stream, but yes, this is something that we definitely can't take our eyes. We are in midst of, in this segment, and we will continue to have a probably, as I think one of your question that do we know what we are going to earn out of this? We are not budgeted any of this in the current. Whatever comes in, comes. But of course, we are going to put a separate stream to drive this. Kamal, you want to add anything?
Guru comprehensively covered.
I was trying to understand what investments are required in this. We will get clarity when we get the fine print. But infrastructure story, there is a clear indication that the shift from unorganized to organized can accelerate with this. That has been there over the last five years, but maybe it can accelerate with these initiatives coming into it. More from the margin perspective, are we seeing some kind of margin improvement from these initiatives or as a shift from the unorganized to organized sector? Also in terms of the manufacturing side, whether the margin profile in the other segments, be it either retail, is similar to what we have in manufacturing?
Amit, margin definitely, when these schemes are implemented, it should definitely add to the margins because some of these schemes are, like Guru explained, direct benefit transfer to employees. Some of these schemes are also towards the EPF or contribution to the employers. This will definitely add to the overall company margin. But the quantification, as we said, we will have to wait for the detailed guidelines.
Okay. Sir, if we can shed some more light on the IT staffing. We have seen some recovery, but whatever we are hearing from the IT, one comment that the hiring is expected to improve after a fixed quarter kind of a flattish or decline. How do you see the domestic IT staffing really to grow from here? Also in terms of margins, if you can elaborate on how the margins look like this year?
Amit, as Guru had said in his opening speech, we are seeing some green shoots and probably it should recover in the second half of the year. Anything else, what is, Guru, if you can add to this, give him some guidance on that?
Sure. Amit, as I said, our open mandates in IT we have seen going up bit between Q4 to Q1. We have also added net headcount of 300+ in Q1. With that note, as we move forward, we definitely— Because the average wage that we operate in IT is anywhere between INR 75,000- INR 80,000 per month, and definitely at a higher margin it has to be attractive in terms of overall margin improvement.
As I said, international geographies, as and when they open up, and I also alluded to it, what's happening in Singapore currently. That's the largest second IT staffing that we have after India. It's again, a high margin business there. Till Q3, we see little mutant, but Q4 is when we anticipate to open. By end of this year, we should definitely march towards back to at least about 20 to 30 basis points improvement in workforce.
Okay, sir. Thank you.
Thank you. Amit.
Thank you. The next question is from the line of Riya from Aequitas Investments . Please go ahead.
Thank you so much for the opportunity. Amit, first question is in terms of your manufacturing and industrial. We are hearing a lot of commentary from the industry that there is a lot of shortage of labors and also from semiconductor space. Will this help us? What kind of growth are we seeing in that segment?
Sure. You are right. If you look at in my speech, I specifically alluded to Job Spots. There is a primary challenge on the source destination and the deployment destination where workforce in India are deployed, right? Most of these manufacturing clusters are not in the main CBD there, in the outskirts, across various clusters. Specifically, we are working with the modern manufacturing companies. These are not traditional sites, where we will have bulk deployment in every large unit.
Considering that one of the key challenges is to create that sourcing hub and Job Spot is something that has given early success to us. We are going closer to those clusters, manufacturing clusters, setting up the satellite office there, ensuring it is fully digital and somebody who is walking in. Of course, lot of groundwork happens there, in terms of getting the footfall into place. Once they come in, then digitally, the candidate gets the credentialization of the candidate and ensuring that they go through the process. The hiring process is entirely different for manufacturing than what we hire for any other sector.
We got to look at a lot of elements like eye-to-eye contact, finger dexterity. Based on that, the shortlisting will happen, and somebody will be able to get a job in a much quicker and faster time being closer. We'll be closer to customer and associates who would be, and also there's a lot of local employment, deployment percentages that has to happen depending upon which state or bordering neighboring state these manufacturing units are. In many ways, we have got that right with four of our Job Spots which we have launched and we are moving ahead.
As we step into Q2 and Q3, by end of this year, we'll have about 12 Job Spots that we will be hiring for our customers from. It's a challenge, and we have, in last three years, from where we were manufacturing as a sector alone, has crossed almost about 65,000 people by deployment. With CapEx investment coming into this space, we cannot take our eyes off and as a first mover, I think we will definitely be front running in this space as industry's investment on CapEx picks up.
Got it. In terms of IT hiring, are you seeing improvement significantly and the mandates have also increased? Also, we heard commentary of all the IT companies that they have, like TCS is growing with 40,000 and Infosys is some 15,000, 17,000. What kind of a growth rate or this will lead to better margins because considering IT has been a good margin business for us. What kind of margin improvement do we see because of this? There is, maybe because of data centers and semiconductor facility coming, there's a lot of shortage of manpower. What are your views on that sector also?
Sure. IT definitely is a margin accretive business. As I said, the average wage there is in the range of INR 75,000 - INR 80,000 per associate per month. Definitely as the talent-- We work in two divisions. One is, you did speak about IT services. IT services is an area where the average wage is lesser compared to the GCCs and this is an area which cannot be ignored. We haven't seen much of movement for last six to seven quarters.
Now we are seeing slowly TCS and Infosys in their results, talking about how they are anticipating the hiring hire, et cetera, for upcoming quarters. When it opens up, it really opens up well, and it definitely adds quantum in terms of the headcounts growing up drastically for us. We are waiting and watching for those mandates to come in. While it has been extremely marginal in terms of Q1, as we step forward, we should definitely see some addition coming in from IT services. Having said that, our exposure is almost 70% to GCC.
In GCC specifically, we work with auto, engineering, healthcare, BFSI. What happens here is these are high margin business. In fact, the way GCCs are set up, we also have strengthened our vertical. We have domain expertise coming in from specific sectors who drive these towers for us internally. For example, BFSI or engineering and auto. We design few components for our customers in terms of deploying people who design components. It is a very different hiring than what I hire for IT services. From that standpoint, of course, the margin that we realize from this kind of niche deployment is also on the higher side.
The only point what we do not drive is we do not drive headcount. We largely drive this on the cross margin or a net margin that we realize per associate per month basis, how the recruiters would work on the mandates. With that, yes, it is going to definitely add as we move. However, just to bring that caution back, while IT will continue to grow, our general staffing, which is also the low margin business, but it is a high cash generating business, will also continue to grow at the same speed. Sometime general staffing negates the growth that comes from other business. We continue to balance both. At a platform level, I think anywhere between 2.4% to 2.6% is a well-balanced delivery as for now.
Got it. In terms of, you just said that we saw wage hikes in Q1, and we are anticipating as per normal scenarios, wage hikes in Q3. When can we pass this on, or partially or a bit to the customers? How is the business model?
Merit inflation increase given to the core employees, it has nothing to do with what we bill to the customers. As far as the margin trajectory is concerned, Q1, like we said, we closed at around 3.7%, and with a mix change that is expected over Q2, Q3, plus some of our other businesses which have high margin but low seasons in quarter one, and with festive season coming up, we expect that we should by end of quarter two or early quarter three, we should be back into 4% margin levels.
Okay. Thank you, That's it from my side .
Thank you. The next question is from the line of Dipesh from Emkay Global Financial Services Limited. Please go ahead.
Yeah. Thanks for the opportunity. A couple of questions. First one, workforce management. If I look core to associate showing a steady downward trend, any implication on margin you think, or this is within range and that is why you do not see much change on margin implication perspective? Second question is on the new onboard contribution, which we give for domestic IT staffing. If I look, GCC remain roughly around 50% for last reported few quarters. If I look the contribution to revenue, it is showing steady uptick. How to read these two numbers, if you can help us understand what it signifies and how to read this number. Second set of question is on the Foundit.
If I look, we have seen sharp increase in search profile update, and job posting on sequential basis, the number which we posted, while active user base largely remains steady, and so it is consistent trend. So how to reconcile this thing, whether we have made any product changes which lead to some kind of changing in reported metrics, which one should not focus on kind of thing, because it is one-off and maybe taper off in subsequent quarter. Thanks.
Okay. I will ask Sekhar to first take the question on Foundit.
Yeah. Specifically on Foundit, there are two ways to look at the business. There is engagement that happens both on candidates and recruiters, which determine the health of the business, and eventually these metrics convert into revenues. So what we spoke about earlier on the metric health is both on the candidate side, which we measure through traffic, profile, and applications done by candidates on the platform.
As well as on the recruiter side, which is net dollar retention rate as well as transaction. All of them have moved significantly positive in this quarter. Even from a sales perspective, we grew 30% from last year's similar quarter to this year's same quarter. So from that perspective, we are on track in terms of both our operating metrics, financial metrics, as well as growth metrics, and that is the broad message from Foundit perspective. Anything specific you want to ask?
No. So let us say if I look your new search profile, it is 85% up quarter-on-quarter, 94% on YoY. Similarly, profile update, 86%. Whereas if I look your revenue, it is more or less 1%, 6% kind of number. Even your active user base remain more or less stable. So consistency, let us say 7% quarter-on-quarter, 16% YoY. Whether we made some changes in the product, that is why some of these reported metrics got materially different than the trend.
Yeah. We launched a new version of the product, which is AI-driven, 2.0 as we called it, couple of quarters back. One of the significant advantages with that is a lot of AI-led value that we are delivering both to candidates and recruiters. That has led to improvement in the operating metrics, which is what you are seeing here. As you know, we are a two-sided marketplace. The more candidates use us, the more the platform becomes valuable to recruiters. Subsequently, this is the base on which we will build our sales growth for the coming quarters. So most of the updates that you are seeing are driven by a new product upgrade that was made to the platform over the last two quarters.
Let me simplify. Whether you expect revenue growth to follow similar trend the way we are seeing this trend?
Yes. From last year Q1 to this Q1, we grew 30% and we expect a similar trend to happen over the subsequent quarters as well. That's the guidance that we've given even in Guru's commentary, that we expect a high growth year for Foundit.
Significantly higher than the 20%, 30% that we delivered in Q1. That trend will continue. Dipesh, you're there online?
Yeah. On workforce, maybe you can answer.
Sure. I will take that. Specific to GCC, you had a question. Just to clarify, by headcount, the GCC contribution is about 43%, and by revenue it is about 69%. As I said,
No, my question was on new onboard contribution. I understand headcount because of realization variation. My question was new onboard contribution and then revenue contribution.
Of the 300+ people that we added in Q1, 49% of that are deployed in GCC and the balance 40% in IT services, about 11% in enterprise. The new net adds that we did are bifurcated in that. Which means 49% of our hiring is going towards GCC.
Understand. Thanks. And the last, core associate?
Core to associate ratio of WFM. Core to associate ranges between close to about 390 to about 425, depending upon the season and terms. We were about 427. As I said, Q2 and Q3 is the season, and we will be strengthening our sourcing engine across, plus investment in job spots, strengthening the recruiters on the frontline there. That's a range. We'll be in the range anywhere between close to 400 to 425.
No, Guru. The question is, let's say we are seeing core to associate, it is 15% down year-over-year. Whether any margin implication happened because of that, or you think you don't see much change on margin because of that ratio remaining within the range?
Yeah, it's within the range. It will not impact margin. That's what I agree.
Understand. Thanks.
Sure.
Thank you. The next question is from Dhvani Shah from Invest ec India. Please go ahead.
Hello. Thank you for this opportunity. Am I audible?
Yes, Dhvani, please.
Just wondered your thoughts on, first, how much is the PAPM in this quarter? And we were just trying to understand that the top customers have seen decline. Are the incremental contracts also facing some cost pressures in terms of the gross margin?
Our PAPM range is always between INR 670-INR 700. That is the range that we trend into. Specific to cost pressure, of course, I keep saying this, cost pressure will be there, and since we whenever we go up for renewals, there will be pressure. But we generally tend to stay ahead in terms of the deployment as well as there are multiple line items that we look at. Capability of sourcing gives us the edge to stay continue in terms of the net realization that we get from an associate.
That is a key differentiator, plus the technology deployment that we do in terms of our application related to work or dash+. They also realize some bit of exclusivity that we bring in when we deploy people or differentiator when we deploy to customers. Through that engagement, we have been able to really keep our average within INR 670-INR 700.
Okay. Just one more thing. You mentioned that this quarter, the conversion from gross margin to EBITDA was 67%. What was it last quarter?
We are in the same range, between 65%-67% is where we are ranging for last four to six quarters.
Okay. Just one more question. In the domestic IT segment, GCC share in terms of revenue is now 69%. We were trying to understand year-over-year basis, the absolute number has declined by 4.9%, while ITeS saw growth of 4.1%. Is this understanding correct?
Yes, it is. What happens is, if you look at IT services, as I said, has started coming back in this quarter. It started getting the momentum back from there. If you look at even the new onboarding that we have said, we have added new onboarding of almost 40% in Q1 in itself from the ITeS which has come in. So you are right.
Okay. Thank you so much.
Thank you. The next question is from , Aniket Kulkarni from BMSPL Capital. Please go ahead.
Yeah, thank you for the opportunity. Could you please give a timeline of the demerger details and when will you think the demerger will be completed, and do you expect any hurdles on the way? Secondly, why do you think this demerger will unlock value for Quess Corp? If you can give some color on that.
Sure, Aniket. Thanks for your question. On demerger, we have previously also guided that it's a 12-15 months process from the date of announcement. We announced the demerger in the month of February, and the scheme is a mirror shareholding scheme, and we expect with a simplistic scheme, we should be able to complete this demerger on the timelines that we stated. Obviously, there is a lot of external interface on this. There are regulatory approvals, but so far we are on track and hopeful that probably by Q1 of next year, we should have the demerger processed. To your question on why or whether it will unlock any value, there were multiple reasons that we did and the announcement of demerger. It does simplify corporate structure and post simplification, there is an opportunity for value unlock.
It also leads to an enhanced managerial focus because all these businesses are well-scaled, large businesses and industry leaders in each of their respective states, respective lines of businesses. Demerger and running it as a separate listed entity, definitely bringing additional managerial focus and gives a competitive edge. Each of our businesses are into different service lines, and hence there was also a need of a uniquely defined capital allocation strategy for each of these businesses, which again, leads to value creation for shareholders.
That was also one of the reasons. It also gives flexibility to these businesses to pursue independent strategies, and that brings a lot of clarity on the investment thesis for, let's say, the shareholders as to which businesses they are investing money. Those were some of the reasons the demerger was announced in the month of February, and like I said, we are on track, hopeful that by Q1 of next year, we should be able to get this through.
Okay. Thank you so much and best of luck for the coming quarters.
Thank you. Ladies and gentlemen, we will take this as the last question, and I will hand the conference over to Mr. Kushal Maheshwari for closing comments.
Thank you. This was a very engaging session. If there are any questions which are left, then you can reach out to our investor relations team separately. I would request Guru to give our closing remarks for the con call.
Thank you.
Ladies and gentlemen, we have lost the management line connection. Please stay connected while we reconnect them. Thank you. Sir, please go ahead.
I take this opportunity to thank each one of you again for joining us for this Q1 earning call. Your questions and feedback have always been valuable, and I would like to once again highlight that we remain steadfast in growing the business robustly across all our operational and financial metrics. Unlocking value to shareholders is in the process. With this note, thanks again for joining us and look forward to meet you all soon. Thank you.
Thank you. On behalf of IIFL Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.