homenewsTeamLease Services reports decline in net profit, aims for margin recovery in specialized staffing
TeamLease Services reports decline in net profit, aims for margin recovery in specialized staffing
Ramani Dathi, CFO of TeamLease Services told CNBC-TV18 that the IT sector is likely to experience a slowdown in the first and second quarters of the fiscal year 2024. However, she expressed optimism that headcounts in both IT and apprenticeship programs would pick up from the third quarter onwards.
TeamLease Services, a leading staffing company, reported a 22.92 percent decline in consolidated net profit for the current financial year compared to the same period last year.
According to the regulatory filing, the company's net profit stood at Rs 24.37 crore, down from Rs 31.62 crore in the corresponding quarter of the previous fiscal.
However, the company reported an 11.54 percent growth in revenue from operations during the quarter, reaching Rs 2,027.27 crore compared to Rs 1,817.41 crore in the same period last year.
Ramani Dathi, CFO of TeamLease Services told CNBC-TV18 that specialized staffing, particularly the IT staffing business, remains their highest margin business. However, due to the prevailing macro environment, both headcount and margin in the IT staffing segment have been impacted, affecting overall margins for the year.
Q1 and Q2 will continue to see a slowdown in the IT sector
Further Dathi mentioned that the IT sector is likely to experience a slowdown in the first and second quarters of the fiscal year 2024. However, she expressed optimism that headcounts in both IT and apprenticeship programs would pick up from the third quarter onwards.
"For FY24, for Q1 and Q2, we believe the slowness in IT will continue, even the degree apprenticeship program given the uncertainty around this scheme, so we may continue to lose some headcount during Q1 and Q2 but Q3 onwards, we are hoping that both IT as well as the apprenticeship headcounts will start picking up," she said.
Realisations pressure in IT staffing
Regarding the challenges in the IT staffing sector, Dathi mentioned about the pressure on realizations, citing increased salary levels for IT professionals during the COVID-19 period.
"This year, we have seen a margin drop in our specialized staffing business. In coming years, especially Q1 and Q2, we are doing massive cost corrections we have already reduced our core employee headcount by 8 percent and we are also doing a lot of cost optimization measures, which will ensure that our specialized staffing business is back to 8 percent EBITDA margin by Q2 because Q1 again we have employee appraisal impact, annual employee appraisal impact. Q2 onwards we should get back to 8 percent margins," she said.
Targeting at least a 20 bps improvements in margin on a QoQ basis
TeamLease services has been working on cost reduction. Dathi mentioned that the company has optimized its core headcount of 8,000 employees between September 2022 and March 2023.
Looking ahead, TeamLease Services aims to achieve a 20 basis point improvement in margins quarter-on-quarter, starting from the second quarter, through a combination of cost optimization and headcount growth across its businesses, she added.
Shares of TeamLease services ended down 2.4 percent from the previous close on the BSE.
Also read: TeamLease announces Rs 100 crore share buyback via tender offer – stock ends higher
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