Ladies and gentlemen, good day and welcome to the TeamLease Q1 FY2026 earnings conference call hosted by HDFC Securities. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Amit Chandra from HDFC Securities. Thank you, and over to you, Mr. Chandra.
Thank you, operator. Good evening, everyone. On behalf of HDFC Securities, we welcome you all to the TeamLease Q1 FY2026 earnings call. Today, we have with us the management team of TeamLease, represented by Mr. Ashok Reddy, MD and CEO, Ms. Ramani Dathi, CFO, Mr. Kartik Narayan, CEO of Staffing, Ms. Neeti Sharma, CEO of Specialized Staffing, Mr. Nipun Sharma, CEO, Degree Apprenticeship. I will now hand over the call to Mr. Ashok Reddy for the opening remarks, with which he can open the floor for the question-and-answer session. Thank you, and over to you, Ashok.
Thank you, Amit. Good evening, and thank you all for joining the call. We have had another quarter of growth. At the group level, we added about 5,000 headcount, and it has been a quarter where we have grown in all the three businesses of Staffing, Degree Apprenticeship, and Specialized Staffing. We have had a net growth in headcount in all the three businesses. We also added over 110 new logos across the businesses. Despite the persistent macroeconomic headwinds affecting the BFSI and IT services verticals, we have delivered EBITDA growth of nearly 39% year-on-year. Quarter- on- quarter, EBITDA got impacted on account of the seasonality aspect of the tech business that we see every year. The resilient demand from enterprise clients and tech profiles in non-tech companies and global GCCs have helped sustain the growth momentum largely for us.
With a sharp focus on operational efficiency, the diversified service mix, and financial discipline, we are gearing up for a steady profit expansion trajectory for the remainder of the fiscal year. I think I will have the businesses detail a little more specific to the three businesses and then finance before we move on to the questions. On to you, Kartik.
Yeah, thanks, Ashok. Q1 FY2026 marked the beginning of recovery for some sectors, while others experienced a mixed performance. The efforts we made last year to win new logos began to bear fruit early in the quarter, particularly within the BFSI segment. With our strong hiring capabilities, we are optimistic about delivering value to our clients throughout the rest of the year. The consumer durables vertical, which was expected to perform strongly in Q1, and traditionally, that's a big quarter for them, was impacted by seasonal factors and saw a moderation around mid-quarter. I'll share a little bit more about it as we move ahead. That said, our general staffing business continued to deliver, closing the quarter with a net headcount addition of approximately 3,000+ , reflecting a 5% year-on-year growth. Notably, a third of these additions came from new client acquisitions.
Our top-line momentum remains strong, revenue growing 11% year-on-year, supported by solid execution and disciplined operation management. General staffing and allied services, therefore, posted an 11% year-on-year growth at the EBITDA level. Across verticals, banking and financial services are the key components of the services sector. It has continued to be a mixed bag since Q3 FY2024. We saw some hiring at the beginning of the last financial year, but that tapered off following the RBI's cautionary stance and advisories related to NBFCs and fintechs dispersing small ticket unsecured loans. To put that overall sector into perspective, some of the major banks hired only half as many people in FY2025 compared to FY2024, indicating the extent of hiring containment by leading financial institutions.
We had called out in our May results that the recent positive first reactions from the RBI, such as the revision in credit risk weightages and relaxed norms for NBFCs, coupled with rate cuts, might result in some recovery. We are noticing that some of the NBFCs have resumed hiring, though at a slower pace. Some of the other parties, microfinance institutions, fintech players, are gradually regaining momentum, though they remain well below previous hiring levels. Credit card business specifically still remains significantly subdued. It's too early to say how this will pan out, but we are positive about this, combined with the fact that income tax relief will lead to a consumption pickup and the need for asset products from financial institutions.
Consumer business, on the other hand, which is one of the larger verticals comprising FMCG and retail, despite some headwinds there, high input costs, subdued urban demand, we were noticing companies reporting sequential improvements in volume in Q4, largely led by semi-urban and rural growth. While April in itself started on a good note, we saw unseasonal rains and weather impacting the sale of FMCG goods, which is largely a conditioning decision by part, which resulted in muted growth for the rest of the quarter in terms of headcount addition for us in that sector. In summary, Q1, we are seeing a mixed bag of sectoral growth. BFSI grew by 6.4% in terms of headcount. FMCG degrew 4.4%. The rest of them, FMCG, telecom, retail, e-commerce, all remained flat.
Sales aggression continued with us closing the quarter with about 44 new logo signers, 60% of them coming up on a variable markup side. On the hiring side, for the quarter, we delivered about 17,000 + new joinies, 10% higher than the last quarter, and 25% of them hired through non-recruiter channels. 24% of these cross-joining are first-time employees. Another key pillar of our business strategy is driving optimization and leverage, essentially doing more with less, using technology as key leverage, and this continues to be in play. As we move into Q2, we expect some of the more muted sectors around FMCG, FMCG telecom, and BFSI to accelerate.
In conclusion, I can say that while we have delivered a year-on-year growth in our general staffing business this quarter, despite sectoral headwinds, we have about 20,000+ open positions and our continued focus on driving productivity, especially in sales and hiring, combined with the momentum we are seeing from our digital transformation, gives us strong conviction about the year ahead. With that, I would like to hand it over to Neeti for the specialized staffing newsletter.
Thank you, Kartik. The IT hiring environment in Q1 of this year remains cautious with muted demand from traditional IT services companies. However, we've seen signs of growth in the Tier 2 IT firms, product companies, and digital-first organizations. Amidst this backdrop, we've delivered improved momentum marked by net headcount addition, better delivery efficiency, and strong customer traction. We closed the quarter with a net headcount addition of about 115 resources, a combination of both India and global headcount increase, reflecting healthy growth in delivery capabilities aligned to strategic demand. We've retained our margin discipline by maintaining cost control, focusing on high-value skill placements, and improving recruiter productivity. In the last quarter, we've onboarded 11 new clients consisting of five GCCs, including strategic logos across global consulting firms, life science and pharma, manufacturing, and engineering customers.
Our client pipeline remains robust with high-quality deals in advanced stages of closure, reinforcing visibility for H2 and FY2026. The GCC segment remains a cornerstone of our business, both in terms of volume and stability, contributing approximately 46% of headcount and 64% of net revenue. We continue to deepen engagement across 75 GCC customers of ours, with high activity in BFSI, healthcare, high-tech, and engineering segments. Despite broader market softness, GCC hiring remains steady, reinforcing the structural strength of this model. Our build-operate transfer model continues to scale as well. In Q1, we expanded engagements in verticals such as BFSI, IT, and ferrous engineering. We also strengthened our GCC enablement offering through ecosystem partners across infrastructure, legal, and technology positioning, positioning us as a full-stack workforce solutions partner. Tier 2 GCCs and new delivery hubs are expanding across India, creating consistent talent demand in newer geographies.
Project-based, just-in-time hiring is on the rise, and our pan-Indian network is helping us deliver to these new requirements. Also, niche digital skills in AI/ML, cloud platforms, and cybersecurity continue to see rise in demand, and we are proactively investing in sourcing and delivering on these skill sets. Recruiter productivity continued to improve, aided by automation-first workflows, focused hiring systems, and upskilling of the recruiters. We saw further improvement in fulfillment cycles and sourcing efficiency during the last quarter. Our global business contributed meaningfully in this quarter, with close to INR 14 crore in gross revenue and over INR 1 crore in net revenue, with a positive EBITDA. The combined value of India delivery and Singapore and UAE presence has opened up new revenue opportunities for us. We are leveraging this synergy for consulting-led hiring and end-to-end delivery from India into global markets.
In summary, while broad-based IT hiring faces macroeconomic headwinds, a selective focus on Tier 2 IT services companies, expanding GCCs, and non-tech firms undergoing digital transformation positions us for continued growth and resilience in the coming quarters. Q1 marks a period of improved execution, productivity, and strategic pipeline building, reinforcing our strong foundation and increasing global traction. With this, I hand this over to Nipun for further conversation and deal.
Thank you, Neeti. The government renewed focus on skilling and vocational education, highlighted in the June budget, which is encouraging. Apprenticeships are gaining momentum, with NSDC data showing an 18% annual growth in apprentice adoption over the last three years. At TeamLease Degree Apprenticeship, we believe the answer to India's skill gaps lies in formal, work-relevant education funded by industry and delivered through education and structured partnerships. Our programs span NAFs, NACs, and work-integrated learning programs, and we partnered with 22 universities to offer degrees, diplomas, and short-term certifications across white and blue-collar roles. In Q1, TLG added about 1,700 apprentices across NAFs, NACs, and WIP, driving an increase in operational PAPM by at least 12. Of these, 1,472 additions came from our learning-led programs. We onboarded 14 new client logos in Q1. Promotion of learning solutions remains a focus area. Among existing clients, 22% have adopted learning solutions.
This growing adoption reflects the tangible impact learning has on improving productivity, reducing attrition, and enhancing apprentice engagement. A key focus this quarter has been monetizing our apprenticeship-linked product lines, including managed training services for companies building entry-level talent pipelines. The market response has been encouraging. We continue our outreach with events and roadshows to advocate for degree apprenticeships as a sustainable talent strategy. These efforts led to active engagement from 94 clients and prospects in Q1. Recent government announcements reinforce our direction. The Central Apprenticeship Council's recommendation for inflation-linked stipend increases, the INR 60,000 crore ITI acquisition plan, and the launch of SOAR, S-O-A-R, Skilling for AI Readiness, signal strong policy support for apprenticeship and employability. Looking ahead, we see growing interest in education-integrated apprenticeships and WILPs across industries such as food processing, healthcare, financial services, ITES, BPO, pharma, etc. We are well positioned to build on this momentum in the coming quarters. With this, I hand over to Ramani.
Thank you, Nipun. Good evening, everyone. At group level, we have added 5,000 billable headcount in Q1 FY2026, including 110 net additions in specialized staffing. On a year-on-year basis, we have added about 19,000 headcount despite headwinds in BFSI and IT. With respect to hiring trend, almost 65% of the gross joinies in the quarter were from Tier 2, Tier 3 cities with an average salary of INR 21,000 versus total base average of INR 27,000. Historically, metros and Tier 1 cities used to contribute to 60%- 70% of gross joinies in staffing business. The change in this mix has marginally impacted the Q2 revenue growth in staffing. Overall revenue grew 12% year-on-year and EBITDA by 39% year-on-year. This demonstrates significant operating leverage and also excluding inorganic contribution, year-on-year EBITDA growth stands at 34%.
All the new acquisition integrations are completed and have contributed by about 4% in Q1 EBITDA and 1% in the Q1 top line. EBITDA on a quarterly basis got impacted by seasonality in business as well as core employee salary appraisals in this quarter. Year-on-year PBT and PAT grew by about 30%. DSO in staffing business stands at seven days and the overall group DSO at 17 days. Funding exposure in the staffing business is maintained at 40% with high cash conversion to EBITDA. Free cash balance stands at INR 310 crore net of CapEx over the quarter. We have received lower withholding certificates at the start of the financial year and completed IT assessments till assessment year 2023-2024, along with the refunds till the year of assessment. All balance sheet metrics are stable and steady. We can now move to specific 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 touch-tone 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 Capital. Please proceed.
Yeah, hi. Thank you for the opportunity. The first question is on specialized staffing. Could you shed some light? I heard the numbers, but could you shed some light on how is the margin profile or the business profile different in India versus overseas? Are you, what kind of traction are you seeing in India and overseas? It seems that this business, if done well, it can help us offset a lot of weaknesses on the IT front. I'll ask the same question after this.
Yeah. So Deep, thank you. This is Neeti here. The global numbers right now are very small. For us to start looking at the trends of a comparison within India to global is too early for us. Having said that, when we're looking at hiring from India, the idea is that wherever there are global requirements, if we're able to use our delivery capabilities, which are India delivery capabilities, we should be able to do better in terms of our execution and margins. That's the reason why we actually even forayed into the new geographies. Ramani can add in case there's something to that. In terms of absolute numbers, the rate caps that we are currently getting in our Singapore geography are almost 5x-6x higher than the India ones. In terms of margin percentage, as of now, our Indian clients are doing much better.
We have a steady pipeline of onboardings in Singapore as well as the Middle East in the coming quarters, wherein the margin expansion can continue.
Right. Ramani, if I heard you correctly, you said that the acquisitions contributed to 4% of overall EBITDA.
Yes.
Right. Second question is on these other HRs, other businesses. Would it be fair to say that the growth we've seen in EdTech is more a function of the NEP, which was delayed last year, which is why Q1 was very poor? Would that be a fair statement to make? This growth should not be extrapolated going ahead in the EdTech business particularly.
No, not really, Deep, because overall, in ETET top line, full-year revenue, there has been a 40% growth year-on-year. It's not just an apprehension because of the last year Q1 impact.
Okay, fair. Within the EdTech side, what would be the steady state, say, growth projections that you would have both on actually HR and EdTech? When should we expect that these businesses, at what scale should they comfortably break even?
No, they should maintain a revenue growth of 25%- 30% consistently, with an EBITDA margin of anywhere between 6%- 8%. This is an HR services segment level.
Understood. I understand that, but I'm saying within that HRTech and EdTech, would you be able to provide, say, at what scale would HRTech and EdTech kind of, I think EdTech is already breaking even, but HRTech, at what scale would you believe that it starts to break even and take care of itself?
Deep, just as Ashok, the EdTech and HRTech businesses are profitable. EdTech has an element of seasonality, but at a cumulative level for the year, ended positive for last year and will be positive this year. The HRTech is really where the investments are happening, and we believe that by mid-next year, we will be EBITDA positive.
Understood. Perfect. By mid-next year. Fine. Thank you. Thank you and all the best.
Thank you. The next question is from the line of Amit Chandra from HDFC Securities. Please proceed.
Yeah, thanks for the opportunity. My first question is on the general staffing segment. You mentioned that most of the headwinds that you're seeing in this segment have been behind, and we have seen an addition of around 5,000 associates, including DA. How is the pipeline for second quarter looking? Traditionally, second quarter has been the strongest quarter for us. We mentioned that we have 20,000 open positions. Is it higher than what we had at the same point of time last year? Also, we have mentioned that 60% of the new clients that we are signing up are on the variable markup model. When do we start seeing the benefit of this on the overall PAPM for the general staffing?
Sorry, Amit, I'll just answer the last one before Kartik takes over the answer to the earlier two. The incremental sign-ups from a volume perspective are relatively small. I think the overall impact on the PAPM from the variable model will take some time to kick in because a larger element of the growth still comes from the enterprise clients who are on a fixed PAPM and a lower PAPM. I think the element of driving new sign-ups continuously in the variable model, in the long run, will start to benefit. Having said that, on the specifics of the open positions and growth, Kartik, go ahead.
Yeah. Amit, a couple of things. One is from a growth perspective, two or three things that we are seeing. One is clearly open positions coming in from some of the sectors which largely in HQ last year had come down significantly, which is banking, finance, and also the consumer business. We are seeing that open up. Are we seeing growth green shoots coming through to Q2? The answer to that is yes. We are definitely seeing that and quite positive in delivering for Q2. From an open position perspective, is it the same as last year? I would still say it is lower than last year. Last year, if I recall as well, it was north of about 30,000 odd. It's roughly about 20,000 odd around this time. That is, again, predominantly due to some of the slowdown which has occurred in banking, finance, right?
Some of our growth is also coming through because we are gaining wallet share in some of our existing accounts. Irrespective of how our customers are growing, because of the growth in wallet share, we'll be delivering a positive result through Q2.
Okay. Also, we have earlier guided or mentioned that the steady state volume growth for the general staffing could be in the range of 15%. Now, we are at 5%- 8% kind of a growth number. Obviously, we have headwinds specifically from the BFSI and telecom. When do we expect the volume growth to reach 15% kind of a number, or is it too optimistic to make a high result?
Q2 is quite positive, Amit, from an open position and a number outlook. I think if the Q2 kind of tailwind holds into Q3, we should be able to kind of drive the numbers up.
Okay. Okay. Ramani, if you can give the PAPM number for this quarter and also in terms of margin tailwinds, are there any margin tailwinds that we have in the general staffing apart from the variable markup that we have signed? Is there any other margin levers that we can see coming up here?
The PAPM has been flat on a quarter-on-quarter basis, Amit. As far as tailwinds are concerned, we are working on other value-added services, both to clients as well as associates. That is going to help us expand profits as well as margins in the next two to three quarters. Other than that, with all six costs now being fully absorbed, the volume growth should directly contribute to a higher operating leverage and better productivity. That also becomes a tailwind goal.
Okay. Okay. Coming on to the specialized staffing segment, obviously, we have seen good recovery there. This is mostly led by the higher GCC contribution. If you can split out in terms of what is the revenue split between India and global in this quarter. You mentioned INR 14 crore is global, which is around 8%. Is it right, Amit? Around 8% of the specialized staffing is from global right now?
That's right, Amit. Yes.
Okay. How do you see this changing over the next, say, one year in terms of the pipeline and the traction that we're seeing both from the Indian and global clients?
It'll broadly hold at 8%- 10% for this year, Amit, because I think we are expecting the internal, I mean, the domestic growth also to sustain. I think both will run in tandem at the current point in time. As we build more clients and expand the element of the presence and delivery capability in Singapore and other places, we could look at that growth kind of outpacing the domestic. This year, I think we will look at it being around 8%- 10%.
Okay. In the specialized staffing, we have seen the margins being soft in this quarter. Are there any specific reasons for that? What is the steady state kind of a margin level that we can expect for the specialized staffing business?
Specialized staffing, two reasons. One is this quarter, we have our annual employee appraisals for core employees, so that has an impact. Also, we are taking up some MSP mandates, wherein the gross margins are on the lower end, but at the same time, we don't have any associated costs for that. While on overall margins, it's value too. On absolute profits, it's still accretive.
Okay. Thank you. I'll be back in the queue.
Thank you. Before we take the next question, we would like to remind participants that you may press star and one to ask a question. The next question is from the line of Dipesh Mehta from Emkay Global . Please proceed.
Yeah. Thanks for the opportunity. First, on general staffing, I think you indicated some of the segments where you are seeing weakness, like BFSI, telecom. I'm not very clear. If you can give a sense about where you are seeing signs of recovery entering into quarter two and beyond, and what factors, let's say, still one needs to be watchful in terms of the anticipation of the tax relation kind of thing. That is first on the industry side, if you can give that some sense. Second question is about the press release where we are seeing steady profit expansion trajectory for the remainder of the year. Are we indicating profit growth to excellence into the next three quarters compared to what we delivered in quarter one, or how one should understand the statement? The last question is about specialized staffing.
I think you partly answered about some weakness, what we observed in quarter one. On a steady state basis, where the historical range which we used to operate in terms of margin profile upwards of 7% is a good range to look for specialized staffing. Thank you.
Yeah. Dipesh, on the general staffing part, I think there are three aspects. Sectorally speaking, the first part is that we said BFSI growth is coming back in some of the subsegments within BFSI, namely NBFCs. That's one part of it. In terms of the three aspects to it, one is growth, which is taking place where the overall hiring is going up in this. That's BFSI to some extent, hopefully with the festive season up, starting August 15th till about Diwali. Consumer, both consumer durables as well as FMCG business, we are expecting it to kind of come back.
Those have been flattish for a while, and especially in Q1 that I called out because of unseasonal rains. The second thing which I spoke a few minutes back was on wallet share. It's not just growth which is taking place. Even within existing customers, we are gaining wallet share. That is what will lead to positive for us. The third aspect, especially in FMCG, is formalization, which is continuing to take place. Even some of our existing customers are increasing their formalization of their workforce. That is also adding to the positive momentum. All the three aspects put together will be what will contribute to growth in Q2.
Hi, Dipesh. On profit expansion, Q1, we have maintained about 39% of year-on-year growth, also including about 4% contributions from inorganic. For the rest of the quarters in the year, we should be able to maintain at least a 30% EBITDA growth year-on-year. I think there is one more question on specialized staffing.
Yeah, Dipesh, yes, about 7.2 is the right number, and I think we'll get there towards the end of the year.
For the last question, just to get more clarity, what you are indicating is it would be a gradual recovery from where we are today to where we exit. 100 weeks kind of swing will be gradual. What will drive it, if you can give the factor which will contribute to that expansion?
More number of customers are giving us high-value mandates. Secondly, different product mix that we are bringing to the table, which again are higher margins, along with the staffing mandate that we are doing. Like I called out in my conversation, the build-operate transfer, the BOSS model that we are working with GCCs does give us a higher margin percentage. Just a combination of different products as well as higher value mandates on IT skills is something that we're looking at improving our margins.
And also economies of scale because the fixed costs are also fully absorbed in this market.
No, I understand, but some of the factors which you alluded, in the first place, we should not have seen some correction in margin, right? Because we were always operated about seven. Though some of the mandates which you alluded, I understand that part, and maybe appraisal is always the annual kind of thing. I'm not very clear why it came down.
Dipesh, in fact, we lost almost 40% of our headcount. We did almost 9,000+ headcount, came down to 6,000, especially with IT services impact. That's when our margins got diluted from about 7%, 7.5% to 6%.
Fair. I was more referring to sequential, but I get the sense. Thanks.
Year-on-year, it's about the same.
Thank you. Participants who wish to ask a question may please press star and one at this time. As there are no further questions from the participants, I now hand the conference over to Mr. Ashok Reddy for the closing comments. Over to you, sir.
Thank you very much. I think as we've called out, we are seeing green shoots. We have had a quarter where all three businesses have grown in headcount. We are seeing green shoots of demand coming in for the Degree Apprenticeship business and the staffing business, and we expect that to kind of hopefully sustain out into the coming quarters. I think a large element of the supporting fixed costs will stay constant, which will enable us to improve and work on the profitability. A lot of the technology initiatives also will play out from the hiring perspective and the operations side as we go forward, and we expect that also to create leverage into the coming quarters. We are quite bullish about the coming quarter with the current outlook on open positions that we have from the customers and the translation of the delivery capabilities that we have built.
We will continue to work on these fronts for profitable growth and come back to you in the coming quarter. Thank you very much.
Thank you. On behalf of HDFC Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.