Staffing company Teamlease Services expects its earnings to remain flat over the next two quarters, due to slowing hiring in the IT industry and the withdrawal of the National Employability Enhancement Mission (NEEM) program, said Ramani Dathi, CFO.
The company posted a 3.4% year-on-year (yoy) drop in net profit to ₹29 crore, for the quarter ended December 31. However, revenue grew 14% yoy to ₹2,108 crore.
seasonal weakness
“I don’t have any kind of visibility on the improvement in earnings and margins unless TI comes back with a big rally, which at this point seems unlikely,” Dathi said. Line of business.
The company’s IT staffing business took a hit due to seasonal weakness and a restraint in industry hiring. In addition, its degree apprenticeship business is also experiencing weakness due to the recent withdrawal of the NEEM program by the government.
Dathi said: “We have 26,000 apprentices; the government is withdrawing the program and we may have to release these trainees in the coming quarters.” The slowdown in hiring in industries like retail, manufacturing and start-ups hurt the growth of our general staff business, he added.
income boost
However, despite the challenging market environment, the staffing company is confident of maintaining its revenue growth momentum due to the nature of the business. ”Diversifying our clients will ensure that we maintain our main guidance of 18-20 percent. We see a lead in hiring from BFSI, FMCG, telecom and other emerging sectors, which we believe will give us room to grow in the future,” said Dathi.
To guard against the slowdown, the company said it began working with non-IT clients to satisfy their internal intellectual property requirements, such as at engineering, pharmaceutical or service companies. “All of them have started setting up their own internal IT team techniques for their transformation projects or digitization projects. So even for the months of November and December, we have added a good number of staff in our IT staff for the non-IT customers,” he said.
