Staffing firm Teamlease Services expects its profits to remain flat in the coming next two quarters, owing to the hiring slowdown in the IT industry and the withdrawal of the National Employability Enhancement Mission (NEEM) programme, said Ramani Dathi, CFO.
The firm recorded a 3.4 per cent year-on-year (y-o-y) fall in net profit at ₹29 crore, for the quarter ended December 31. Revenue, however, grew 14 per cent y-o-y to ₹2,108 crore.
Seasonal weakness
“I don’t have any kind of visibility on improvement in profits and margins unless the IT comes back with a huge uptick, which at this point in time seems unlikely,” Dathi told businessline.
The company’s IT staffing business took a hit due to seasonal weakness and moderation in hiring by the industry. Additionally, its degree apprenticeship programme business is also seeing weakness due to the recent withdrawal of the NEEM programme by the government.
Dathi said, “We have 26,000 trainees; the government is withdrawing the programme and we may have to release these apprentices in the coming quarters.” The slowdown in hiring by industries such as retail, manufacturing and start-ups affected the growth of our general staffing business, she added.
Revenue momentum
However, despite the challenging market environment, the staffing company is confident of maintaining its revenue growth momentum owing to the nature of the business. ”The diversification of our clients will guarantee that we uphold our topline guidance of 18-20 per cent. We see a runway in hiring by the BFSI, FMCG, telecom and other emerging sectors, which we believe will give us headroom for growth going forward,” Dathi said.
To secure itself from slowdown, the company said it has started working with non-IT clients to source their internal IP requirements such as in engineering, pharma or services companies. “All of them have started setting up their own internal IT teams techniques for their transformation projects or digitalisation projects. So, even for the months of November and December, we have added a good headcount in our IT staffing for the non-IT customers,” he said.