Ladies and gentlemen, good day, and welcome to Quess Corp Limited Q1 FY 2024 earnings conference call hosted by IIFL Securities Limited. As a reminder, all participant lines will be in a listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you require assistance during this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Vidit Shah from IIFL Securities. Thank you and over to you, Mr. Shah.
Thank you, Nirav. 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. Lohit Bhatia, President, Workforce Management; Mr. Pinaki Kar, President, Global Technology Solutions; and Mr. Sekhar Garisa, President, Product Led Business.
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 proceedings forward. Thank you, and over to you, Kushal.
Thank you, Vidit. Good morning, everyone, and thank you for joining our Q1 FY 2024 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 faced by the company. Please refer to slide number two of investor presentation for the safe harbor clause. With that safe harbor, I will now hand over the call to our Group CEO, Mr. Guruprasad.
Thank you, Kushal. A good morning to everyone and thanks for joining us today. Our consolidated Q1 revenue stood at INR 4,600 crore, which grew by 16% year-on-year and 4% quarter-on-quarter. Quarter one performance was in line with our annual operating plan. Global Technology Solutions platform had an excellent quarter as it crossed INR 100 crore EBITDA benchmark. The platform had delivered consistent growth in the past two years with quarterly EBITDA increasing from INR 64 crore in Q1 FY 2022 to INR 100 crore in Q1 FY 2024.
In Q1 FY 2024, we added around 14,800 headcount and closed the quarter with total employee strength of over 525,000. This is an increase of about 12% year-on-year and 3% quarter-on-quarter. Sourcing contributed to 27% of new hiring, signifying our strength in the staffing industry in terms of our sourcing capability. The business environment was varied across sectors with key sectors such as IT and FMCG witnessing a slowdown in hiring while sectors like BFSI, Telecom, Manufacturing performing well with over 3,000 headcount additions in both the sectors.
Our mature platform continued to demonstrate growth with each of them recording double-digit revenue growth in Q1. The consolidated EBITDA for the quarter was INR 154 crore, which was impacted by the slowdown in permanent hiring. We acquired about 183 new customers in Q1 quarter, which would also help us to generate growth in coming quarters. Now let me talk specific about all the platforms. To begin with, Workforce Management platform. The headcount in our Workforce platform reached 404,000, 15% year-on-year increase with revenue growth by 17% year-on-year and 5% quarter-on-quarter.
Coming to specific, in General Staffing business, we added 14,000 headcount during the quarter, led by BFSI, Manufacturing, and Telecom with additions of about 57 customers in the quarter. Our vertical-focused strategy has created in BFSI, crossing 100,000 benchmark in our supply associates headcount. Manufacturing, one of our focus vertical, contributed to 50% of our new sales wins. Manufacturing and industrial is now the third largest vertical in staffing. And to note, it is also more than doubling in headcount in two years to 50,000.
70% of all our new deals have come from consolidation in the market, either from local contractors or first-time clients creating additional production capacities. The per associates per month gross margin profile, also known as PAPM, stayed with an average range of about 670-700. We have invested in core recruiters to take advantage of upcoming festive season in coming months as we are seeing a blended push coming up temporarily. To that extent, temporarily, our core to associate ratio has a slight drop. It is 1:469. So we are getting prepared for an upcoming season.
IT staffing. Indian IT staffing selection business saw global headwind during the quarter. Temporary staffing business was able to mitigate the impact of slowdown by focusing on high-value segments. However, the permanent staffing vertical registered a slowdown with revenue decline over 30% quarter-on-quarter and 73% year-on-year. Our North American business, we made an investment of INR 11 crore last year. While we have ongoing contracts on hand, it is taking longer gestation period than expected to deliver the project results.
We are assessing the market condition, basis which we will take decision on changes to be made in our North American office. Moving on to GTS platform. GTS had an excellent quarter with 21% EBITDA growth year-on-year and 5% quarter-on-quarter. This was mainly on account of revenue realization from robust order books generated over prior quarters. Deep account mining and intense execution and excellence. The highlight of platform are as follows, Conneqt continues to maintain its momentum with order book of INR 35 crore of ACV closed during the quarter, which predicts well to sustain the revenue momentum in coming quarters.
Growth momentum in CLM business of Allsec continues to drive by excellent 29% year-on-year growth in North America market in Q1. Our Non-Voice BPM business grew by 31% year-on-year, and collection business grew 33% year-on-year, and F&A transaction, finance and account transaction processing business grew 59% year-on-year. This is a testament to our continuous investment in digital tools and innovation to solve the customer problem. In platform business, HRO business in Allsec strengthened its market leadership with 3.7 million pay slips processed during the quarter, which is a strong quarter growth of 3.2%.
North America-based Insurtech platform business under MSX had an excellent sequential growth, quarter-on-quarter growth of 18% on account of strong order book in preceding quarters as well. Going forward, the focus remains as follows, specific to GTS. Sustaining and accelerating the momentum of Non-Voice BPO in Conneqt and operational excellence margin expansion. Leveraging on growth momentum in North America market specifically for Allsec CLM business, and creating full-fledged healthcare practice around the current anchor clients. Launch of new HRO product and platform over next two quarters to consolidate the market leadership and market expansion.
Coming to our OAM platform, we have registered a top-line growth of 16%, while EBITDA grew by 3% quarter-on-quarter. The IFM business saw a revenue growth of 16% year-on-year and 4% quarter-on-quarter, with major section contributing to the growth are Manufacturing, BFSI and Public Infra and IFMS has also added about 20 new logos during the quarter. Our focus continues as follows. Healthcare, Public Infra, and Industrial. These vertical accounted for over 60% of sales in Q1 FY 2024, and we continue to build on early wins.
Food vertical saw a growth, gross margin improvement of 35% year-on-year on back of improved operational efficiency. In addition to also we added six new contracts with an ACV of INR 30 crore during the quarter. Security business saw a marginal decline in headcount in Q1. As we continue to pursue profitable growth, going forward, the business will focus more on margin improvement while increasing the market share in the existing cluster with specific focus on top 10 cities. Our Telecom active infra business had good quarter for Vedang through which the revenue growth was 46% and EBITDA growth by 57% as compared to Q1 FY 2022 and 2023.
As part of the 5G rollout continues to gain momentum, we expect this business to grow well in coming quarters. Moving to Product-Led Business. Foundit had a flattish growth in revenue during the quarter with most of the customers not actively hiring for the positions. International market, which contributes 35% of our business, has been much more adversely impacted. Further, customer satisfaction metrics like retention rates, CSAT, and NPS have improved quarter-on-quarter by improvement in product and the candidate data.
The candidate engagement metrics have shown significant improvement in the quarter, with job postings are up by 56% quarter-on-quarter. New registrations are up by 42% quarter-on-quarter. Traffic is up by 27% quarter-on-quarter. Substantial progress has been made in product development with several features launched, including the first-gen AI-driven feature, subscription-based billing program, et c. Coming on to a couple of general updates across Quess.
At Quess, we have always believed in driving positive change in society and creating a meaningful difference in lives of our associates. I am happy to report among the associates that joined us in Q1, 23% were female who came on board. 35% have entered into formal workforce for first time. Median average age of 25, providing an entry-level employment for youth. To improve the associate experience, we continue to invest in center of excellence, focus on digital onboarding, digital compliances with capacity to manage large volumes of transaction to support our future growth across the group.
Additionally, to provide learning and development opportunity for our core employees, we have partnered with leading higher learning institutes such as XLRI, ISB and Harvard, catering to employee ranging from recruiters to CXO. The executive certification program in recruitment and selection by XLRI, first of its kind of program, jointly developed by Quess and XLRI to bolster the country's recruiting engine.
Central management and executive program by ISB and Harvard are geared towards building future leadership pipeline and accelerate the transformation of senior executives into the skilled leaders, thus ensuring Quess will always have industry-led talent in the leadership position. I would like to conclude by saying that the revenue and EBITDA improvement in Q1 against the macroeconomic headwind have once again underlined our all-weather business model. Again, with my closing comment that Q1 overall has been in line to our plan. With that, I will now hand over to Kamal to brief you on the financials.
Thank you, Guru. Good morning, everybody, and thank you for joining us today. I extend a very warm welcome to everyone who has logged into this call. I hope you have had a chance to look at the investor presentation and financial results for quarter one, which is aligned with SEBI's LODR requirement as reviewed by the statutory auditors. Let me walk you through the quarter's financial performance. Revenue stands at INR 4,600 crore, an increase of 16% year-on-year and 4% quarter-on-quarter. Our net headcount increased by 15,000 quarter-on-quarter.
We saw a healthy growth across all our platforms during the quarter. EBITDA stood at INR 154 crore, a nominal growth of 1.3% and 0.4% year-on-year and quarter-on-quarter respectively. Few callouts on given margins will be covered in platform-wise updates subsequently. Our committed cash management and debt repayment continued in the quarter and this has resulted in an improvement in our DSO days by three days year-on-year and one day quarter-on-quarter, which now stands at 56 days. Accordingly, our gross debt position has come down by INR 14 crore- INR 517 crore.
For this quarter, our tax saw good increase quarter-on-quarter by 60% to INR 48 crore, which is in line with our AOP. This is on account of volume growth across major businesses, reduction in finance cost due to lower average debt utilization and one-off tax provisions taken in the last quarter. Year-on-year, our tax saw a reduction by 29%. This is on account of higher finance cost due to rising interest rates throughout last year, slowdown in the permanent recruitment space as highlighted by Guru and additional investments in North America.
Moving on to platform-wise updates. Workforce management. Revenue for workforce management stands at INR 3,221 crore, a strong growth of 17% year-on-year and 5% quarter-on-quarter. Corresponding EBITDA stands at INR 83 crore, a decline of 12% year-on-year and 3% quarter-on-quarter respectively. Margin depletion is on account of the below reasons. Continued slowdown seen in the permanent recruitment space and delays seen in conversion of pipeline accounts in North America. Coming to GTS. Revenue for this platform stands at INR 563 crore, a strong growth of 11% year-on-year and a dip of 1% quarter-on-quarter.
Corresponding EBITDA stands at INR 100 crore, growth of 21% year-on-year and 5% quarter-on-quarter respectively. GTS achieving INR 100 crore run rate per quarter is a milestone achieved for the first time. BFSI sector continues to drive growth in Conneqt non-voice business. Margin mix of Allsec business took a positive change in quarter due to growth in DBS international business. International margin in this business now contributes close to 50% from 44% a year ago. Moving on to Operating Asset Management.
Revenue stands at INR 690 crore, a growth of 16% year-on-year and 1% quarter-on-quarter. Correspondingly, EBITDA stands at INR 31 crore, a growth of 1% year-on-year and 3% quarter-on-quarter respectively. EBITDA grew by 3% quarter-on-quarter despite seasonal drop in telecom and food business due to tight control on IDC and operational efficiencies. We have rationalized certain low margin customers across businesses and same is reflected in drop in headcount. Product-Led Business. Revenue stands at INR 126 crore in Product-Led Business, a growth of 8% year-on-year and 3% quarter-on-quarter.
Corresponding negative EBITDA stands at INR 26 crore, further decline of 7% year-on-year and 27% quarter-on-quarter. Losses during the quarter attributable mainly towards higher marketing spends and merit inflations. Excluding non-cash ESOP costs, Product-Led Business losses stands at INR 21 crore. Moving on to some corporate updates. Merger update on Conneqt, MFX and Greenpiece. As part of board's approval of scheme of amalgamation dated July 7th, 2021, Quess had filed for approval of scheme with NCLT. Honorable NCLT has admitted the petition and next date of hearing is August 11th, 2023.
We are expecting this transaction to complete within this financial year. Income tax updates. There is no change in our position from last quarter. As mentioned in our previous quarter call, for the year 2017-2018, we have completed the DRP proceedings, and for residual matters in the year 2017-2018, our appeal is at ITAT, and the hearings are expected to commence in the current month.
For financials 2018-2019, our matters are at DRP stage, and hearing is yet to complete. Honorable DRP is expected to pass the order on or before September 2023. Please note that there is no change in the contingent liability of INR 74 crore on account of tax proceedings as disclosed in the last quarter. We thank you all for your continued support, and I would like to now open the floor for questions.
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 line of Raghuram from Eurindia Ventures . Please go ahead.
Hello. Good morning. This is Raghuram here. I wanted to ask a specific question on the Allsec CLM business that you mentioned. If you could give us some ACV numbers on the new contracts, one last quarter and this quarter, that would help in getting a perspective on what kind of growth can be possible there.
Sure. Thanks for bringing up this growth here. As part of my speech where I was alluding to, Allsec has delivered a 29% year-on-year growth specifically in North America market in Q1. With the new set of leadership change there and the kind of focus which we have put in the sales program, we are seeing good set of wins coming from the healthcare sector in North America. In line with that, our delivery center is backed up in Manila, in Philippines. We have expanded the number of seats to cater to the center. While we would not call out the specific customer name, but largely it belongs to the healthcare sector, and we have added almost 500 seats to deliver to the customer, to substantiate the customer delivery from Manila. Pinaki, you want to add in?
Yeah, sure. As Guru has just now told, the first thing is that we have consistently grown at 29% in the North America business, and that is over the last two quarters. ACV perspective we can tell that we are well poised that we have almost double the capacity of the Manila center, and that is after getting the business. So we can have sort of a figure from there. 600 seats we had, we increased capacity by another 600 seats. So that 600 seats we are going to consume in the ensuing quarters.
More importantly the processes that we are handling in this particular anchor client that we are adding to, is only one part of value perceived chain . Obviously, it is based on performance. If we perform consistently as we have been doing, we get further segments of the addition. We hope keeping anything [inaudible] forward-looking because we know it is all based on performance. At the same time, whatever the momentum that we have created in terms of the percentage growth, we should be able to sustain that.
Okay. Just an additional question on the non-America CLM. Obviously, Conneqt, you gave some ACV numbers and growing at nearly 30%. Is that something that obviously seems to be a very similar kind of case from a North America perspective? Also, domestic business, is there any sort of Naozer Dalal having come from Conneqt, is there some sort of outlook that you can provide there?
The Naozer Dalal coming for Conneqt may not have a correlation there because he was leading there. It was mainly domestic business. That is why he was doing that. Now he has come to a mostly international business, and he is doing well here. Strategically, what we do is that most of the Conneqt business is domestic, by the nature of the business. Whereas in Allsec the business is such there are only few customers, which we have to restricted to that, which are the domestic business, which we continue to sustain and grow because once we have got those two businesses, it does not make much sense to have a dedicated company servicing the customers in the marketplace. Right?
From the Allsec perspective, if you do a pricing wise in terms of the operating margin that we get, it is [inaudible] maximum margin followed by the international CLM business. Then comes the domestic CLM business. It comes in that pack. From Naozer Dalal and Allsec's perspective, it is also in our interest collectively to push more HRO business and more international business because of the reasons you know that. We are compromising on the clients that we have got in the domestic business, of course. But if you ask in terms of priority, that is not the growing that business through Allsec may not be our strategic priority, that is the priority for Conneqt.
Just to add, Raghuram, we strongly believe in creating the leadership within, and there will be more such movements in future as we develop leaders internally. It doesn't mean that the definition of that entity would change. They will still continue to focus what that entity is supposed to be aligning to their plan. But it will create more synergy in terms of leaders and that sort of thing.
That's what I told. Based on the entity, the strategic plan is that specific entity, irrespective of the leader who is there. He'll focus on the strategies of that particular entity, what it is good for, and the three year, five year plan we have for that entity. And the internal movement of the leadership that we do, that is a credential leadership bench and giving opportunity to internal leaders based on the performance and obviously the business growth which they have shown. Even if they move to adjacent to it, obviously they will bring that forward. But they will do what is right for the strategy for that particular entity without any overhang of what they've done in the past.
Thank you. Raghuram, I request you to join the queue again for a follow-up question. Participants, you may press star and one to ask the question. Next question is from the line of Arvind Dureja from Bright Financial Management . Please go ahead. Arvind, may I request to unmute your line from your side and go ahead with your question, please.
Hi. Good morning, sir. Thank you for giving the opportunity. My question is regarding your target of achieving 20% ROE by FY 2025. How do you plan to achieve it? Because from what I see, it seems to be a distant reality. So what are your plans? Thank you.
Thanks, Arvind. Kamal this side, thanks for this question. We are on a 20% ROE for FY 2025 was an aspiration that we had set for ourselves prior to when COVID had hit us. From where we are right now, we have two, three businesses which have to fire full throttle for us to achieve that target. This year is a very important year for us from Foundit perspective, where we are expecting this business to come to a break-even stage by the exit of this financial year.
We have very similar expectations of becoming break-even and then turning EBITDA positive within this financial year for our North America investments. These two businesses should give us an upgrade in terms of both our EBITDA as well as the ROE. We need to take next two and a half years to reach to that number that we had set as a target for ourselves.
Okay, thank you. The second question is, you guided from this quarter onwards, the losses in product-led business will start coming down. But if you compare from quarter-to-quarter, the EBITDA losses have increased. What is the reason?
The guidance, Arvind, was to exit this financial year with a break-even in the Product-Led Business, and we continue to stand with that guidance. The increase in the burn in the current quarter is as per the plan. We are spending on marketing, we are spending on products, and we are spending on the right fit for business. To specific question on the Product-Led Business, I will ask Sekhar to-
Thanks, Kamal. I think like Kamal's articulated, the plan is firmly in place to be able to achieve break-even by the time we exit this financial year. Despite the external circumstances, we are sticking to the plan and Q1 performance has been very much in line with the plan. From here onwards, we would see the numbers laying out in the subsequent quarters where the EBITDA burn would come down and leading to a break-even in Q4. That obviously has significant impact on the group financials. As of now, we are firmly within the plan and the plan takes us to break-even by end of the year.
Thank you. That's a good answer.
Thank you. Participants, you may press star and one to ask a question. Next question is from line of Abhishek Nayak from Hexagon Asset Management. Please go ahead.
Hi. Thank you for the opportunity. My questions are pertaining to the Workforce Management segment. First is a bookkeeping question. Could you just tell me the EBITDA contribution from the general staffing segment? Secondly, on the North America staffing, you mentioned that you wanted to break- even by the first half of FY 2024. You mentioned also that there's a pipeline delay in that. What's your opinion on that? Would you be able to achieve that target?
Thank you. Thank you, Abhishek. For your question, I will just guide you to Lohit, our President for Workforce Management. He will give you an answer on that. Lohit, over to you.
Yes, good morning, Abhishek. Thanks for the question. The first part of your question is what is the contribution in this from the General Staffing India business that hovers around the 55% mark. General Staffing during this period has done slightly better. The North America burn has contributed to a slight decline in the international contribution, and hence General Staffing from a near 50% contribution in EBITDA has changed towards about 55%. So that is your first part of the question.
Your second part of the question, as we had said in the previous calls as well, and the previous quarters as well, we want to guide towards a break-even by the time we are exiting first half of the year. As Guru also explained in his commentary, and so has Kamal, by the time we are in the Q3, we should start seeing some positive trend. Just to give you some snippets of where we have reached in North America, we have eight active large clients we are working with.
We have 80 mandates and positions which are already with us, and these are margin-accretive positions, all of them. We have five on boards which are already with the team as far as the U.S. operations is concerned, and we are gearing up our delivery and our sales in such a manner that we are able to consistently add to that kitty of on-boards and performance on a month-to-month basis.
Okay. Thank you. That is very helpful. Thank you so much. Just a general question as such. So you have mentioned in your presentation you expect to give away 33% of your FCF back to the shareholders. Do you have an internal target for FCF for this financial year that you might be able to share with us?
Yes, Abhishek. We have in past also guided that we believe to do a 70% OCF from all our businesses on a consolidated basis. Then there is a stated dividend policy which you just mentioned, which we have not changed. We continue to be guided by the same policy.
All right. Thank you so much.
Thank you. Participants, you may press star and one to ask a question. Next question is from the line of Mohit Mehra from Guardian Capital. Please go ahead.
Thank you for this opportunity. I think the previous part is some kind of on this, but what exactly is the plan for the Product- Led Business? Because I was also under the impression that the losses would go down sequentially. So how much losses are we comfortable underwriting? Let's say we are not able to break-even by the end of it. So what happens then?
Thanks, Mohit, for your question. I will ask Sekhar to answer this.
Yeah. With respect to product-led business, basically on Foundit, the cost structure remains more or less constant now. The revenue growth will be the one which will be contributing towards breaking even. In terms of what you see between Q4 and Q1, the business has a seasonality built into it. From Q1- Q4 over the last three years, we typically see business going up by 70%. While you will see that sequentially it is remaining where it was compared to last quarter, compared to last year's same quarter, we did grow by more than 30% and that growth rate will continue, which will in the quarters going forward will bring the losses down all the way down to Q4 when we are expecting to brea-keven. It is as per plan.
The cost structure has more or less stabilized. The revenue is the one that is going to go up in the subsequent quarters, which will result in break-even. The other good part is now given the growth over the last couple of years where we grew on a CAGR basis more than 50%, the revenue is now at a place where even if there are short-term hits in terms of externalities, we will be able to absorb. We are a company with more than $23 million-$25 million of revenue, so we should be able to absorb any short-term external shocks that we might be able to see even in the next few quarters.
Can you give any numbers? How much loss are you comfortable underwriting? For example, even if the revenues go up and our marketing expenses go up more sharply and then it is causing us to burn cash flow. Any numbers would be useful.
The guidance we have laid out for the quarter from Q1- Q4, which is in the range of about INR 50 crore-INR 60 crore, and we are firmly within that range for the entire product-led business as of our time. And in terms of your question around will the marketing cost vary, the cost structure, like I said, is more or less stabilized. The only variation you would see is whether we will grow revenue or not. And we are firmly on that track. Like I said, year-on-year between last year's Q1 and this year's Q1, we have seen more than 30% growth even in this quarter, and we expect this to only become better.
Okay. Thank you.
Thank you. Participants, you may press star and one to ask a question. Next question is from the line of Rishikesh Oza from RoboCapital. Please go ahead.
Yeah. Hi. Thank you for your question. Sir, my first question is with respect to the Workforce Management business. Could you give any outlook on what EBITDA margins can we see going ahead? They have gone down this quarter.
Lohit, will you take this question?
Sure. Hi, Rishikesh . Good morning. If you notice for the last four quarters, we have been trending between the 2.6%- 2.8% of the margin profile as far as workforce management is concerned. If you look between the Q4- Q1, the decline has primarily come from the merit increases that we have given to 90% of our staff on April 1st, which would have been about INR 2 crore. The decline in the recruitment business, which both Kamal and Guru alluded to. We know what is happening with the IT services and the impact.
It used to be a high margin business, permanently took the business in IT. That is another INR 2 crore. The U.S. operations are negative INR 1 crore, INR 1.5 crore. If you add all of this up and you factor for the growth in the general staffing business, which is just shade under a 2% EBITDA margin business, GS has contributed INR 5 crore positive in Q1. The above line items have given the decline. GS has given the addition. GS comes at a lower EBITDA margin profile. Definitely gives better cash positions because it is a 77% collection based business, and we continue to grow it. Now, how does this change? There are three things which change.
One, merit increases have already happened, so that is the case. Recruitment solutions has already declined and come to a flat trajectory hereafter. While we do not see a marked improvement in the IT services part of the economy for the next one to two quarters, we do not see any further decline whatsoever impacting our margins in any ways. U.S., the current burn is at its highest point. The start of the year typically has a high burn because you also have to take care of your recruitment processes and the benefits of the employees which are employed there for the entire financial year.
Hereafter, as I was explaining in the first question, that we are also seeing revenue increase so that burn goes down. We should first come back to our original trajectory of 2.8% where we were, and then inch upwards to a 3%. As U.S. and the other assets start to perform, which is IT start to perform, we should be able to cross above the 3% mark. At every stage, we are very clear what needs to be done to get that additional 20 basis point upwards, and that's the plan which the entire leadership team and the management team has.
In addition to that, Rishikesh , we are also taking a hard stab on our cost side, setting up our center of excellence, making it much more robust to bring our cost to serve down. So many initiatives on cost side as well. Combination of both, it should lead us to come back to 2.8% level first and then marching towards 3%. That was workforce.
Okay. Would it be fair to say this would take couple of quarters more to go back to 2.8% and then to 3%?
That's right. Yeah, it will take at least about two quarters to get back to 2.8%.
Okay. Also, for your Product Led business, are we saying that from next quarter onwards, our EBITDA losses should now trend down?
Yes. It will start swimming down from this quarter onwards. Like I said, the glide path for the losses to go down from Q2 all the way to Q4, where we expect to break- even.
Okay. By Q4, it should break- even is what you said, right?
That's right.
Okay. Thank you for answering, sir. Thank you.
Thank you. Participants, you may press star and one to ask a question. Next question is from Vidit Shah from IIFL Securities . Please go ahead.
Hi. Thanks for the opportunity. My first question was just a clarification on the North America board. Did you say it was about INR 4.5 crore?
That is right Vidit. That is for the current quarter, it is close to INR 4.5 crore.
So let's say it was INR 3 crore in the previous quarter, which has gone up by INR 4.5 crore despite us starting to build and winning about eight large customers. What is really increased on the cost side? Just trying to understand the dynamics of the business there.
Kamal, if I could come in. Vidit this it was about INR 3.8 crore last quarter, and it's close to the high- 4s this time. So it's a delta of about INR 1 crore difference right there. This difference, as I was just explaining in the previous question. Start of the year, you see a bullet payment which goes towards insurance, and the bullet cost in U.S. ranges between 16%-19%. That has to be taken at the start of the year itself, though, for the rest of the year, you will have your payroll cost for your employees and everything. This is not just employees, it's also the employees' medical plan and family plan.
In the case of a new business, this is more evident and more visible because it's a new business, it's a small revenue stream. To your point on revenue, yes, you're absolutely right. The eight customers and the 80 positions and the five onboards that I was talking about in the question prior to that. That, yes, has started yielding revenues, which you will start seeing from the Q2 and Q3 onwards as that revenue picks up pace, and this cost does not repeat in the second quarter. You'll see this trending downwards and downwards quarter-on-quarter.
Got it. How much revenue are we doing in North America currently?
At the moment, about under $20,000.
Understood. All right. My second one was, they have added our core recruiting team for the upcoming festive season. Just if you could give your outlook on what to expect in the upcoming festive season, given that there is a slowdown in IT and FMCG. Do you expect this to recover or do you just expect a boost in Retail and Telecom and BFSI?
Thank you for asking that question and thanks for bringing the focus back from just one business that we are investing in from WFM, which is North America. Yes, I agree, a INR 4 crore, INR 5 crore burn in a quarter is not our well star kind of risk profile. That is a medium to long-term strategy for which we are investing. Coming back to the core businesses in WFM, which are today doing well. I will just give a couple of very key points which should not get lost in all the communication that we are doing. One, we have crossed the 400,000 mark.
No staffing company ever in India has achieved this milestone. We are again the first to accomplish this milestone. The second is that we continue to grow at about 54,000 for the last one year and close to about 15,000 for this year. Our general staffing business alone has added 57 logos, and IT has added over 13 logos. The kind of business that we are doing, it boasts the vertical strategy as well as the margin strategy. BFSI is over 100,000, retail is over 80,000, M&I is over 50,000, and Telecom is very close to 50,000.
What we are looking at is Q1 always starts slow and then you build to Q2 and Q3. At this stage, we have a conscious call. Do we continue to invest in our systems, our processes, our technology, and governance, and compliances for the future, making ourselves become 500,000 or eventually 1 million high workforce in years to come? Or do we pause just to deliver 20 basis point or 25 basis point higher? We feel we still have a lot of market share and a lot of opportunity in the market to capture. Guru alluded to one point which should not get lost in translation. He said in the last 12 months, we have added 177,000 people over the UAN for the first time.
As the largest business industry, we are also seeing the formalization of the economy take place and many large projects and large customers asking for mandate end customers. The Workforce Management business within that GTS business, itself has delivered a healthy EBITDA growth quarter-on-quarter as well as year-on-year. We feel that this is the right time for us to continue investing in that business, and I hope that answers to your very specific point, what do we feel for the next six months.
Retail definitely is one that we are betting on. Manufacturing and industrial continues to be a bet, not just this quarter or the season. It could be for next three to five years. We definitely expect Telecom and Banking Financial Services, where obviously NBFCs equally join the growth during the season. Those are the industry segments. On IT services is slow, but I must tell you and repeat to you that our staffing business under digital consulting products, GCC, the financial services, is actually doing fairly well. The high margin, high ticket niche brand is coming from there. IT services is the only one where we feel that the chain could continue for some more time.
Got it. Just a clarification on that. Given that this year the season is delayed by a month or so, would we expect 2Q margins to remain at this level and pick up only from 3Q into general staffing India business? Or should we start expecting recovery in the standalone general staffing business from next quarter?
General staffing per se, margin profile doesn't really change. What happens with general staffing is that you have higher EBITDA per se EBIT contribution, but not so much of EBITDA margin contribution. You are absolutely right. Last year, Dussehra and Diwali were in October. This time, Diwali is in mid of November or so. The conversations for ramp-up is definitely delayed by two weeks. Earlier, those conversations and onboards start from July end. This time we are expecting them to start from the weekend of [inaudible] the weekend of Independence Day, and thereafter.
At the same time, we also feel that we might get an extended one month of the season itself. Last year, the season sharply truncated on October 31st with Dussehra, Diwali happening in the same month. This time, Dussehra is in October and Diwali is in November. Hopefully, we should get an extended one month of the season as well. It is a mixed bag. Margins may not change because of general staffing. Margins have to change because of U.S., because of international, and because of professional staffing. I hope that clarifies the business dynamics.
Sorry. I meant the Quess associate efficiency will start improving during the festive season and that side.
Yes, absolutely right. That is absolutely right.
Okay. Just one last one from me on your head up businesses. I understand Monster has been flat for the last couple of quarters of outings study. That is just 35% of the overall revenue. We have Digicare in there, which also has not really shown any growth in revenue or margins. Could you share your view on that business? What the strategy is on that?
Sure. Digicare has been almost flat. Our strategy is as part of the portfolio restructuring and the thing we are putting more management bandwidth to do a deeper review with the business. We are seeing this is a season. Q2 is a season. Generally, Q2 and Q3, if you look at the Digicare business, performs extremely well. That's how it is more of a cyclic business. We are seeing the kind of uptick coming in for Q2 and Q3 for this business.
Okay. Understood. Thanks. I will get back to you.
Thank you. Next question is from line of Vikrant Gupta from ICICI Prudential. Please go ahead.
Hi. Good morning. Am I audible?
Yes, Vikrant.
Yeah. Hi. I had a question on the general staffing business within our workforce management business. Slightly longer term. Over the last four or five years, our staffing headcount has moved from 190,000 to today almost 400,000. Over the same period, we have also seen our core to associate ratios move up from maybe INR 300 to almost INR 500. So good headcount growth and efficiency gains as well. Could you provide a sense of what has been our general staffing EBITDA specifically over this four to five year period?
How has it moved? Because at some level, the number is probably INR 300 crore from five years back and today it is around INR 345 crore and that obviously has EBITDA staffing as well. I just wanted a sense of how the general staffing EBITDA has moved over the last four, five years, given the strong headcount growth and the efficiency gains that you have achieved [inaudible] Thank you.
Sure. Vikrant, maybe I will give some high-level note on this and maybe I think, for long term, the kind of planning that we have, would be happy to take it offline as well. Just to give you a little background, I think this is a business which has been consistently delivering fantastic CAGR for us. 77% of our accounts are collect and pay, our cash flows are far superior in this business. The way it has evolved over a period of time, slowly, we are having large vertical focus that it is getting into. As I alluded in my speech, BFSI alone has crossed 100,000 by headcount.
Manufacturing and Industries have crossed almost about 50,000 by headcount. We have FMCD and FMCG going close to over 80,000 by headcount. While we have all this marching towards 100,000, at a point, the business itself was about, when we went for IPO, we were shared over 100,000. The way we are, every strategy for each of this platform has to change. For example, it starts from the way we hire, the way we structure, the way we onboard. We are building those digital frameworks and technology platform to assist each of these.
For example, sourcing for BFSI is very different than sourcing for manufacturing. There is much bigger plan that we are building for ourself to gear up to. When we touched 200,000, we were thinking, "How do we handle 400,000?" There is a deep thought process that we have put against each of these platforms. It is going to be more of a vertical focus that would come into over a period of time. With that note, I will get Lohit to add some more points. I would prefer just to take it offline and take it through this.
Vikrant, that is a good question, and like Guru explained, I think we will have to take you through the numbers in detail. Just to let you know, between Q1 2019 to Q1 2024 as we are recording today, the EBITDA from the GS business alone has grown about 225%. We are almost 180% higher than the nearest competitor on a quarter-on-quarter basis as far as EBITDA from this business is concerned. I think it is clearly reflected in the overall numbers.
What has not changed for this industry, and I think we have to be cognizant of that fact, is that the gross margin at a PAPM level continues to remain in that INR 700 ± INR 20 or INR 25 on either side. The headline number has not changed. What has changed for us is volume. What has changed for us is our cost, which we have kept in check.
The GS business delivers close to 2/3 EBITDA from the overall gross margin that it makes. At that run rate of delivering 2/3 of EBITDA from the gross margin that it makes, increasing gross margin, even while at this moment industry is not ready to accept a higher price, per unit price, I think we are still able to deliver a higher EBITDA quarter-on-quarter and year on year. Now here is a question on everybody's mind, should be that will this industry ever accept a higher price?
I think as long as consolidation does not completely take place in this industry, as long as more players do not become formal, and when I say formal, the reporting standards have to be same like or as good as a listed company. The audits, the governance, the compliances, and everything has to become as good as any of the listed companies.
I think that is where probably the industry will start to see a slight bit of a price increase and eventually should start seeing improvement in that ratio as well. Today, if you were to ask me a question, do I plan based on a higher gross margin PAPM? The plans are not based on that. Plans are based on everything else. When that comes, that will come as a windfall gain whenever that starts to happen in our industry.
Thank you.
Thank you. Participants, you may press star and one to ask a question. Next question is from the line of Mukul Garg from Motilal Oswal. Please go ahead.
Hi, thanks. I had two questions. Guru, first, wanted to understand a bit on the operating asset management side. There, the growth has been seen moderating from a high of 30%+ mid of last year. Now you guys are in mid-teens. Is most of the growth moderation in OAM coming because of the cost rationalization which you guys are doing for a lower-margin customer? Or is there something which is also impacting the industry growth visibility?
If you can just drill down on whether it is something which is coming from soft service, hard service, or security, or is it across the board? Second, Sekhar, wanted to just get a little bit more sense on Foundit. Your revenues haven't been kind of inching up. If you look at job postings, they have jumped dramatically this quarter but the consumption has shrunk 8%. Exactly what is happening there? If you can also share your sense of how gradually can the loss reduction happen there.
Sure. Let me address the OAM platform and then followed by Foundit. Mukul, if you look at overall platform has delivered about 16% year-on-year growth. Last year, couple of call-outs. We had announced in Q1 that we partially exited a large contract, a key contract, and we had taken that impact during the year. The second area is specific to the security business. The way we are focusing on margin expansion in our IT staffing business, where headcount came down, but our total absolute EBITDA contribution went up.
It is the same strategy that we are adopting in our security business. We are letting go few contracts which are really not rightly priced or rightly profitable. We are realigning. While we have got our headcount down, we have recalibrated that during the year, and we are now at a steady state, stable EBITDA contribution that is coming across the OAM, if you look at. We are on an average hovering around 30, 31 ± with the impact that we have taken between the quarters.
There were a few contracts like infrastructure, the smart city project, which was also giving us some losses in between. That has been concluded and August 31st is when we will be completely handing over the project this year. All these had some kind of impact in one or the other quarter, which brought in some level of instability. But now if you look at it is steady state. Telecom business there is also phenomenally doing well for us.
We have pursued about 46% growth year on year backed on 5G push that is happening around the country. With all of this, where we are today, I can tell you we have passed with all the variabilities that we had in the platform. It is a very steady state revenue, and it should now start giving you the update. Now, coming back to the margin, we are about 4.4%. The platform is delivering about 4.4%. We strongly believe, and there are also benchmarks that this platform can go up 100 basis points, so it can deliver about 5.5% EBITDA. We are working towards that. Now, in terms of cost optimization, if you look at the core to associate ratio is about 107.
Anything about 100 is good in this segment. We have done a lot of work there to bring our costs up. We are focusing more on productivity and better procurement, better setting of our assets that we have put there. Plus the sales team in itself. We have added almost about 43 logos in Q1 itself. Sales focus, first of all, coming out of all past variabilities that we had, plus the focus on cost reduction should now definitely take us moving upward in this particular segment. Any questions further, happy to take on OAM.
I think that's quite helpful. Thank you.
I'll ask Sekhar to give you a little color on Foundit business.
Hi. With respect to Foundit, your question has two parts to it. One was around operating metrics. Probably you're looking for linkage from operating metrics to how the revenues are playing out. As you know, we are a two-sided marketplace which has candidates on one side and recruiters on the other side. We track metrics on both sides. Some of those metrics are important from an engagement perspective, but the revenue is impacted disproportionately by other metrics.
What you are seeing in terms of growth in candidate engagement metric. What we are going through is economy where the jobs have softened down a bit. Therefore, you would see that the consumption of inventory, which is essentially what recruiters are doing on the platform, which is in correlation with the hiring activity, has come down. However, we also have to make sure that the candidates are engaged on the platform despite lesser search, which is being done by the recruiters. Therefore, we run a specific program which brings in jobs into the platform from other sources as well.
This is purely from an engagement for candidates perspective. So that is the number that you see because we went out of our way to get jobs onto the platform. Job increments on the platform do not directly reflect in revenues because more than 90% of the recruiter side revenues actually come from our database product, which is as per the industry standard. So that is why you cannot correlate the increase in jobs to revenues. What is happening across the industry is that the candidate metrics are showing improvement because more and more candidates are looking for suitable opportunities.
Therefore, those numbers are going up, and we are also trying to action on that trend by making sure that we are giving them more reasons to be active on our platform. On the recruiter side, the action is a little softened because the hiring activity is muted. That is what you see getting reflected in terms of reduction in search volume, which is the recruiter search volume. Specifically, your question around how would this play out over the next two, three quarters boiling down to the break-even target that you have taken. The cost structure, like I said, more or less is constant. The revenues would follow sales. The sales numbers still seem healthy.
Like I said, compared to the last quarter of the same year, we have grown about 50%, and we expect the same to continue and in fact become better over the next three quarters. As those sales numbers translate into revenues over the next three quarters with the constant cost structure, we should be able to trim down the EBITDA as per the plan, boiling down to break-even. We also have some very significant product launches lined up towards the end of this quarter, beginning of next quarter, through which also we see a significant revenue uptick happening. All in all, Q1 is as per plan. The revenues will go up while the cost remains constant, leading to a break-even in Q4.
Understood. That is very helpful, Sekhar. Thank you.
Thank you very much. Ladies and gentlemen, we will take our last question. We now hand the conference over to Guruprasad Srinivasan for closing comments.
Thank you. I take this opportunity to thank each one of you for this interactive session. As I said, our Q1 went on per the plan that we had made, and we are really geared up for our Q2, so look forward. In case if you have any questions, do reach out to our investor relation team and we look forward to stay in touch. Thank you so much for joining us today.
Thank you very much. On behalf of IIFL Securities, let me thank you to close this conference. Thank you for joining us. You may now disconnect your lines. Thank you.