Indian staffing firm TeamLease's Q2 profit falls less than expected on non-IT growth

Teamlease Services

08/11/2023 10:59

BENGALURU, Nov 8 (Reuters) - India's TeamLease Services
 TLSV.NS  reported a smaller-than-expected drop in profit on
Wednesday, as healthy growth in its general staffing business
helped make up for a slowdown in its specialised IT staffing
services.
    The company, which engages in hiring and training people for
several skills before helping placing them, said consolidated
net profit fell nearly 15% to 272.7 million Indian rupees ($3.28
million) for the quarter ended Sept. 30.
    Analysts, on average, had expected a nearly 17% drop to
265.8 million rupees, according to LSEG data.
    Teamlease's general staffing business saw strong revenue
growth, driven by the banking, financial services and insurance
(BFSI) and consumer verticals.
    The company's degree apprenticeship business saw a net
positive trainee headcount growth for August and September,
aided by several government and private training programmes.
    This comes after the discontinuation of the government's
National Employability Enhancement Scheme (NEEM) in December
2022 hurt previous quarters' results. The company said it
expects placement for the remaining NEEM trainees to be
completed by fiscal 2024.
    "Staffing outlook has been positive on the back of strong
hiring trends across all non-IT industry verticals," said
Managing Director Ashok Reddy. 
    All of this helped Teamlease recover from weak demand in its
specialised staffing business. IT service providers predict
their clients will cut back on discretionary spending, including
freezing hiring after a pandemic boom.
    "Expect this year to be flattish from a revenue and margin
perspective," Teamlease said, adding that uncertainty in IT
staffing continued.
        This is the company's fourth straight quarterly profit
drop.
  
    The revenue in its general staffing business grew 17% while
the specialised business rose 3%. Consolidated revenue from
operations rose 16% to 22.73 billion rupees, in line with
analyst estimates.
    The company's core profit margin slipped to 1.4% from 1.6% a
year earlier due to a 16% jump in total expenses.    

($1 = 83.2496 Indian rupees)

 (Reporting by Dimpal Gulwani in Bengaluru; Editing by Rashmi
Aich and Janane Venkatraman)
 ((Dimpal.Gulwani@thomsonreuters.com;))