Ladies and gentlemen, good day and welcome to the TeamLease Services Limited Q2 FY 2023 earnings conference call hosted by ICICI Securities. As a reminder, all participant lines will be in 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 touchtone phone. Please note that this conference is being recorded. I now hand the call over to Ms. Aditi Patil from ICICI Securities. Thank you and over to you, Aditi. Thank you, Yashashree. Good morning, everyone, and thank you for joining the call. Thank you TeamLease management for giving us the opportunity to host the Q2 FY 2023 earnings call. We have with us today Mr. Ashok Reddy, Managing Director and Chief Executive Officer, Mr. Rituparna Chakraborty, Co-founder of TeamLease and Chief Executive Officer, Degree Apprenticeship, Mr. Sunil, Chief Executive Officer, Specialized Staffing, and Ms. Ramani Dathi, Chief Financial Officer. We will start off with the remarks from the management, after which we will open the floor for Q&A session. I now hand the conference over to Mr. Ashok Reddy. Thank you and over to you, sir. Thank you, Aditi, and good morning to you all. I think as we close quarter two, we continue to see growth traction happening in staffing across some of our industry verticals. Clearly we're seeing headwinds in Specialized Staffing and the Degree Apprenticeship program, details of which, Sunil and Ritu will cover a little later. We did enter the year very optimistic of continued tailwind, but there has been a softening in the external environment, which is driving us to focus on productivity and costs. While there will be growth, I think some of the costs that we invested in, given the external environment, we are re-looking at this point in time. Overall, we did grow our headcount by about 6,500 for the quarter, and the overall revenue growth has been 29% year-on-year and 4% quarter-on-quarter. We did have an absolute EBIT and PBT growth and improved margins quarter-on-quarter. I think that's something that we had called out that we would focus on, and we'll incrementally be driving that. We maintained the PSPM and marginally improved the FTE for the quarter. Focus on hiring has continued to play out with higher conversion and a higher absolute number of hires that we have been doing for the customers. Our core headcount has largely been flat. In line with my earlier statement, we probably would reduce our core headcount as we go forward by not replacing attrition in line with the market demand, market conditions. EdTech has seen deferral in billing, but I think the feedback from universities and the student billing are that we would likely catch up in the coming quarters on that deferral revenue. HR Tech is continuing to see momentum in growth of revenues and also the market opportunity, and we are investing there to leverage the opportunity into the future. Overall, we believe the long-term opportunity in our markets continue to play out. You know, some of them will have headwinds, some will have tailwinds. In the long term, we believe they all have growth opportunity, and we will continue to focus on growth, margin improvement and capital investment choices as we go forward. Rituparna will give an update on the DA front, Sunil on specialized staffing, and Ramani a little bit on the finances. Thanks, Ashok. We've made progress from our Q1 performance and have registered a net growth in apprentices to the tune of 4,000. Among the four businesses under Degree Apprenticeship, retail and e-commerce and auto and industrial were the major contributors. Demand in tech, telecom, BFSI, consumer has been sluggish. We maintained a steady momentum in new logo acquisitions, having added about 28 new logos. Sorry to interrupt. Ma'am, can you speak a bit louder, please? Your volume is a little low. I'll just start. We made progress from our Q1 performance and have registered a net growth in apprentices to the tune of 4,000. Among the four businesses with Degree Apprenticeship, retail, e-commerce, auto, industrial are major contributors. Demand in tech, telecom, BFSI and consumer has been sluggish. We maintained steady momentum in new logo acquisition, having added 28 new logos, taking our half year count to almost 60. Hiring contribution to gross contribution improved marginally by about 2%, and the non-recruiter channel contribution to overall hiring additions have been around 70%, which is better than last quarter's 46%. Overall conversion has also improved to about 30% as against last quarter-to-quarter's 25%. However, this is definitely not where I would like it to be. However, the overall volume of open positions have been showing a declining trend month-on-month and is much below our expectations. Our FTE productivity ratio improved significantly for the business with an improvement of 4% over the previous quarter. To update you on some recent developments, volatility in the market notwithstanding, the regulatory environment with frequent ill-conceived and archaic and frequent changes and announcements in the space is expected to have significant impact on our overall growth in the apprenticeship space and the overall appetite of apprentices in general amongst prospects and customers. However, we are engaging very closely with the regulatory authorities to iron out the issues and over a period of time, hope to ease out some of the current challenges. However, in the next two quarters so far, we do not expect a significant growth in volumes the way it stands today. Thank you. Sunil, over to you. Thanks, Ritu. I would like to give little bit about Specialized Staffing. We witnessed an unexpected headwind in the IT sector, leading to sudden slowdown in the hiring. Amidst this turmoil, we maintained steady revenues and grew by 5% year-on-year and de-grew marginally on a sequential basis. The decrease in revenue this quarter is primarily driven by strategically opting out one big client due to payment issues. It is for the same reason that we see associate headcount drop of 9% on a sequential basis. However, from year-on-year perspective, the associate headcount has increased marginally by 2%. Many of our clients have slowed down on hiring, and most of our customers are focused on improving the utilization factor through effective use of resources rather than adding headcount. The open demands have dropped by approximately 40% in this quarter. However, we focused on improving our productivity and fulfillment ratio, which helped us to further strengthen our position as a partner of choice. The macroeconomic indicators point to very soft client quarters as we go forward with uncertain outlook for growth. We have witnessed some tech hiring in non-tech companies post-pandemic, as most of them have embarked on digitalization programs. We shall focus on balancing the current dip in the IT sector hiring through tech and non-tech hiring to some extent. We have added 14 logos in this quarter, and we will continue to focus on client acquisition in rest of the fiscal year. These new logos represent a balanced mix of IT and non-IT companies. The outlook for the next quarter is uncertain based on the current market conditions. We expect the revenue growth to be broadly flat or might even see a marginal decrease. During H1, we invested for tailwind, which has turned to headwind, and in H2 we will focus on cost optimization, client addition and productivity improvement. We have very strong leadership team with pertinent industry experience and shall try to maximize the current market opportunity. Thank you. Thank you, Sunil. Good morning, all. As we have indicated in the last quarter, our costs have remained flat. All investments have already been fully absorbed, and we are not expecting any increase in our core headcounts or costs for the next few quarters. Because of tighter control on costs, we have managed to grow our EBITDA by 25% and PBT by 16%, even though revenue growth is only 4%. Overall, at unallocated level, the EBITDA is INR 9 crore. However, this quarter, as advised by the auditor, the government training business, which is on a sunset mode, has been moved from HR services to unallocated. That has added to almost INR 4 crore impact on unallocated EBITDA. Barring that, as we have indicated last quarter, we are and will be maintaining, our run rate of INR 9 crore per quarter. Under HR services, HR Tech, the profitability is due to H2 of the year, and we are expecting overall 8% net margin for the year. On income tax front, we got a clean audit for assessment year 2021 with full reliance on JSW. The refund is expected in the next couple of weeks. Our current cash balances stand upwards of INR 250 crore. We'll be utilizing them for any organic and inorganic opportunity that we point to them. Thank you. We are now open for questions. Thank you very much. Ladies and gentlemen, we will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their 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. We have our first question from the line of Aditi Patil from ICICI Securities. Please go ahead. Thank you for taking my questions. My first question is regarding general staffing. Revenue growth in this segment was 4.7% quarter-on-quarter, whereas headcount growth, if we consider general staffing plus NETAP headcount, it grew only 2.6% quarter-on-quarter. Does this mean that realization per associate has increased for us? Effectively, I mean, like we had called out earlier, we are seeing higher inflation in wages. I think our PAP in absolute terms are flat. As a percentage aspect it is marginally down. Even though like the realization is higher because of wage inflation, but that is not flowing into the margin, correct? I think 25% of our markups are on fixed-markup model. Only 25% is on variable, so we get benefit only on the 25%. The balance 75% as a percentage markup gets diluted as and when the salary, target salary goes up. Okay. Got it. In specialized staffing also we have seen a similar trend, like headcount decline was higher at 9.6%, whereas revenue decline was just 2.5%. Over here also it was because of associate salary inflation. Yes. Here, it was not that, like Sunil had called out, we let go of one mandate, which was a low margin mandate, in the telecom vertical. That was let go of towards the end of Q2. The replacements have largely been in the IT skill set, which are higher wages. That's really why you see a bigger dip in headcount in the specialized staffing side, but not that big an impact from a revenue billing perspective. Okay, got it. Also, in terms of hiring, like Q3 is generally, like seasonally strong. Can you comment on the demand trends in each of the verticals in general staffing? Like I said, general staffing we still are seeing demand. We believe that some of the verticals in BFSI consumer and retail are looking at opportunities for growth. We have open positions, we are delivering to them. Some of the like the emerging fintech, EdTech and all of these have been on a slowdown and a backtrack headwind aspect. I think overall from a general staffing perspective, we do continue to see open positions and an opportunity for growth playing out in Q3, Q4. Like it was called out, specialized staffing is facing headwinds, absorption of associates and headcount freeze. There is an element of probably a flattishness there. DA has some external challenges around the aspect of the government regulations of onboarding apprentices and staff, which is delaying and deferring the element of open positions and planned onboarding. I think overall we should see a positive trend, largely driven by general staffing and some element of a flattishness from the other two. Okay, thank you. That's it from my side. Thank you. We have our next question from the line of Bharat Shah from ASK Investment Managers. Please go ahead. Yeah, hi. Good morning to everyone. I have a business model related question. Our margins have always been sort of, say, wafer-thin. Even on those wafer-thin margins, we hardly seem to register any improvement. In fact, we seem to surrender them and then seemingly post some small improvements on and off basis. Lately our ambition to improve our margins on a long-term that we maintained several times but has never materialized. Overall size of profits when we see, it begets a question whether this business model is designed to get a predictable, long-term, sustainable growth despite a large formalization opportunity. Or it is, we just eke out an existence from quarter to quarter, and we would have reasons to explain sometimes good, sometimes not so good a performance. Because from time to time we seem to be getting into some activity which we then regret and we want to withdraw. When we got into that skills business or whatever we call it, and we want to close it down. HR services we think is a good business, but it never seems to make any money or adequate money. In general, I'm a bit perplexed as to what exactly is the business model really in sync with the formalization opportunity. Is there any meaningful long-term predictable value creating growth possible in the business? Whether to get a respectable enough margin which justifies so much of activity and so much of work to be done. Otherwise, it just sounds meandering from one period to another without any very clear purpose. Bharat, I mean, appreciate the question, but I think, you know, the purpose of the opportunities that we have in employment, employability and education does exist. It is not, and we have been calling this out from the beginning, a high margin business. It is a volume business, and hence will require us to do a lot of things operationally and at scale on a continuous basis. It's a choice of industry that we have taken. Two elements as we scale. While the largest element of continued play over the many years has been on volume and scale, we are looking to see how it can also be on value. That is really where the portfolio got built up. Now, as we build a portfolio, you know, there are trials and errors that we have to do because most of what we are doing is not a tried and tested market. From that perspective, I think from a long-term outlook, we will make mistakes. We will take small bets in things that if they play out, we increase our play on. If they don't play out, we pull back on and so on. That has been the reality over the last many years, if you look at it. I think that is something that we will continue to do also into the future. In relation to HR Tech, I don't think it's been a business that has been continuously losing money. It has made money and a margin last year. There is a cyclicality involved in that. In the training-specific business of HR on that side, we did get into government training, but we realized that dealing with the government was not our cup of tea. We've decided to pull back from that. I think, you know, there are many variables in there that, you know, there is no right answer to, and there is an element of an experiment to be done. As we realize something plays for us, we scale up. Something doesn't play, we pull back. It's your point that margin improvement is really something that while absolute profits we have been able to drive up, the margins have not driven up. I think that at a portfolio level coming to play is really what we are looking at and as I called out, we will be focusing on. Pure scale is playing out, but we want to address it to scale and value. Just want to add on that point, Bharat. On absolute's profits, we are improving on a steady-state basis. However, since COVID, we are seeing a very sharp increase in the average salaries, which is diluting our overall margins. We don't have any direct control on 75% of the business, which is on fixed-markup model, so it is impacting our margins. There is some sort of unpredictability on that front, so we also are seeing. That's why we are trying to balance the portfolio with higher margin businesses like HR services and specialized staffing. The specialized staffing did very well, and this quarter is where we have started to see the headwinds. HR services, we turned profitable last year, and as I mentioned earlier, even this year also we'll maintain an 8% net profit run rate in that business on a full year basis. Since there is a very tighter control on costs, there'll be a steady margin improvement, quarter-on-quarter starting this quarter, and we are confident of demonstrating that. Just to add, Bharat, the only, you know, leaving inorganic investment out, you know, we are a debt-free, cash flow positive and cash-generating company. The only area that, outside of inorganic, we can invest in, and, you know, it translates if it succeeds to high return on equity is choices around certain verticals of business opportunities. I think it is a judicious call for us to explore those opportunities as they come up. Thank you. We have our next question from the line of Nithin Padmanabhan from Investec India. Please go ahead. Yeah. Hi, good morning. Padmanabhan, your volume is very low. Am I audible now? Yes. Yeah. Perfect. Thank you. A couple of questions. The first is, you mentioned the general staffing business should do quite okay over the next two quarters. It's more of the BFSI and the IT, the specialized staffing which will be under pressure. That said, in the general staffing business, is there any slowness that you're witnessing, or it is our current momentum continues? Right? That's the first question. The second was a clarification. I think, Rituparna, you had mentioned about lower open positions. Were you referring to the BFSI business, or was it for general staffing overall? I think both are a combined thing. Lastly, if you could give some color on what are those regulatory challenges that we are facing, if you could give some specific color there as well. Thank you. In general staffing, the momentum of growth continues to play out, Nithin, but obviously some sectors, I mean, have had a headwind. I mean, we did have an entire vertical focused on the emerging sectors of EdTech and fintech and all of that. The funding freeze has put a complete halt on hiring, actually translating into reversals leading to layoffs happening in that sector. I think even telecom has been a slowdown from an open positions perspective. I would say the balance play of some sectors have seen a slowdown in open positions. Some sectors are seeing an uptick in open positions. At a gross level, we are still positive from a perspective of open positions, onboarding, and growth. You know, it is not in line with if all verticals had been firing the way they seemed to be going at the start of the year. To that extent, I would say there's some element of a softening for general staffing in the quantum of open positions that we thought there would be for the year as we were in Q4. I mean, net of that, we are still positive on that front. I think the slowdown in some open positions that Ritu was mentioning was specific to DA. I will also let her cover the specifics of some of the regulatory hurdles that are leading up to the element of that slowdown on that front. Sure. Thanks. The thing is, yes, there is the open positions sluggishness that I'm anticipating here on the DA side. Given that since we are talking about deploying apprentices, organizations invest in apprentices keeping the future in mind, and given the little bit of uncertainty that some sectors are facing, I think it's something that some organizations are choosing to put on the back burner in terms of their prioritization. On the regulatory front, actually, there have been frequent extremely erratic changes that have been made in recent times. I mean, one of them is like for every registration of an apprentice in the portal, there needs to be an immediate OTP verification, mobile verification and email verification. Given the profile of some of these youth, I mean, this is something which is hugely impacting their onboardings and essentially becomes a dampener. Some of the claims, I mean, there's a direct benefit that the government had three months back initiated directly into the account of the trainees. There has been huge lag in that. Essentially, it was something which was supposed to have been done in 72 hours is now taking 2-3 months. That itself is becoming again a dampener for both candidates as well as employers who are very keen to deploy apprentices. But I do. I'm confident that the constant dialogues that I'm having with the government, with MSDE, NSDC, we should be able to turn around some of these and be able to showcase some improvement, but it's not gonna happen overnight. That's the reason I'm kind of anticipating some amount of slowdown and flattishness in the coming two quarters. I mean, just to add to that, Nithin, I think some of the well-intentioned objectives of the government translating onto the ground from an operational execution perspective are kind of putting more challenges, given the profile of the apprentices, for corporates and the candidates and, you know, that's kind of pushing them back. We are in dialogue with the government to kind of try and address these changes and processes. You know, with the government it does take time. Sir, this is very helpful. Just one clarification is, the emerging sectors, what proportion of the headcount would they have been earlier? About 12% was in emerging. Thank you. We have our next question from the line of Deep Shah from Batlivala & Karani Securities India Private Limited. Please go ahead. Yeah. Hi, good morning. Thanks for the opportunity. Sir, given that it's very clear, this will be a volume gain for quite a few years, are there any large sectors that you wish to enter afresh or where we are not present and then we can tap into those sectors? Is there any such opportunity you have in your mind? That, that's really where our portfolio has built up, Deep. If you look at it, few years back, we didn't have specialized staffing. Specialized staffing came in as a higher margin play to the table. Our entire HR services, if I were to split up between EdTech, RegTech and HRTech, EdTech and RegTech have been in the portfolio for a while. Both of them have turned positive, will turn positive by end of this year also and are higher margin businesses. HRTech is one area that we have chosen to invest in, and that is a new vertical scale play that we are looking at, which will be higher margin business and can, you know, it will complement the overall offerings that we take to the customer. From that perspective, as I had mentioned earlier to Bharat's question, I think consciously looking at what verticals or P&Ls could complement our overall product portfolio and offering to customers. We don't want to get into businesses that are unrelated, but related complementing offering, that, you know, play not necessarily to volume. Volume will come from general staffing, but other businesses could effectively drive the element of higher margins over a period of time. Yes, we will continue to look for opportunities on that front to build on the portfolio. We will not get into unrelated areas, but complementary areas. One of the key areas that we are making investments currently is in the HRTech space. Key will be to focus on profit and profitability with margins. Right, sir. This is very helpful. Sir, as a follow-up, if you could give us some color, maybe not exact numbers, but some color as to, you know, as we speak today, how many of our large clients are we also offering these extra services. I mean, you know, any assessment around that, and what is the potential to penetrate the current clients? You know, any such color would be very helpful. Today, each business in a sense operates on its own beat. Which is to say that we have a little over 3,000+ customers across the different businesses. About 15% of them use more than two products from TeamLease. One of the key focus that every P&L has now is also to work up our cross-sell, up-sell opportunity with the customers that we are working with. I think that is a focus area that we are driving on, either through dedicated cross-sales teams in some of the P&Ls or the existing account manager being up-skilled to be able to sell the other products to the customer. The initial play for us was to build independent P&Ls and independent clients. Now that there is an element of maturity in the products and services, we do and are focusing on cross-selling and up-selling to the overall customer base on the product portfolio. Thank you. We have our next question from the line of Vidit from IIFL Securities. Please go ahead. Hi, good morning, and thanks for taking my question. My first question was on these cost-saving initiatives that you're talking about to combat the lack of volume growth. Could you just, you know, shed some light on what are those sort of initiatives that you may take other than the reduction in core employees? And if possible, can you quantify the amount that you think we can save from these levels? Effectively, like I had called out earlier, the only investment that we can make for organic growth is in teams. I think we had made choices, last year, towards the end of the year, given how the market was looking and the tailwinds existed, to increase, the teams in sales, account management, in HR recruiters and everything else. Obviously now with an element of a slowdown in certain areas, where there is lesser demand or, decrease in demand, we have people not having sufficient work or not being productive enough. That's really where the aspect of, you know, headcount rationalization opportunity in the core employee comes in. We stayed flat on the headcount in Q2, other than in HR Tech, where I called out that we are making an investment, and I think in Q3, Q4, that headcount will probably reduce. For us, we don't have much other high fixed costs. I mean, our office spaces are at optimal, some of them being business centers and operating on, you know, increase or decrease depending on the headcount aspect. I think the second element is driving forward the digitization agenda that will improve the productivity. Even this quarter, we did have a slight improvement in the FTE ratio that we measure, which plays on saying that technology digitization at the back end is kind of driving an element of productivity at the front end. We have a roadmap further that will play out. At this point, this is difficult to quantify the specific numbers because we are playing it out on an incremental basis, depending on. We don't want to do a knee-jerk reaction. You know, we still believe that the market opportunity is positive to the long haul. Is it, is that long haul one quarter away, two quarters away, or three quarters away, seems uncertain at this point in time. We're not going to do a knee-jerk reaction, but it will be a gentle, kind of, action as we go forward. Okay. Got it. Secondly, just some color on, you know, the IT staffing margins or the specialized staffing margins, sorry. I mean, despite a reduction in headcount and the loss of customers, we've actually seen EBITDA increase, you know, very marginally, but nonetheless increase quarter-on-quarter. We're probably seeing, you know, the best margins over the last six quarters. Are these sort of margins sustainable given the headwinds that the business is likely to face in the coming few quarters, or would you expect some sort of margin corrections to happen out there in order to, you know, be competitive enough in the market? I think some of the underlying for that in margins being flat and staying there is largely driven by the fact that we've been able to let go of some of our low-margin business. It was actually hurting on the DSO front and the element of the profit front overall. I think we've used this window to kind of let go close mandates and kind of hold on to the mandates that actually play to the aspects of the bottom line coming in. I think also as Sunil has called out, while IT is clearly facing headwinds and there's a slowdown, professional staffing in, that is to say, IT and non-IT, is something that they have been driving for the last two, three quarters, and numbers there have started going up. It's not large in volume, but, you know, it compensates for the volume that we lose in low margin, playing out to higher margin on this front. I think as we look at it going forward, sustaining the margin is something that should be possible. Growth is really where the challenge is at this point, given the market. I think, you know, the fact that our realizations are what they are, our hiring capabilities are strong. We have been closing more open positions. Though they are just kind of replacing the attrition that is happening at the client end. All of those metrics are better from our perspective. I think for the coming two quarters also, we feel that margins should be sustainable. Growth is what we are calling out, could be a challenge. Thank you. We have our next question from the line of Alok Deshpande from Edelweiss Securities. Please go ahead. Yeah. Hi. Good morning, everyone. A couple of questions. First, just to take a step back, you know, on the general staffing business, I think somewhere around the middle of last year, we saw a headcount addition gaining momentum, maybe because of the teams that you had picked up on the sales side. Also, I think the numbers, you know, in north of 10,000 associates added for a couple of quarters. Now, I just wanna understand, was that a case of more of a pent-up demand because of FY 2021 being depressed, or before that because of COVID, the scenario being depressed? Or now this quarter, we have seen only about 4,000 getting added. Now, going forward, you know, are we gonna see any momentum going up on those numbers? Or, you know, given that the festive season is behind us, are we looking at those numbers shrinking as well? I mean, without getting into specifics, I think, you know, just want to see the general trajectory. Alok, yes, for the last year and the year before, we did see post-COVID, which kind of did bring in a lot of demand and a lot of onboarding and growth in numbers. I think this year that element has been more subdued. There is no reversal of the pent-up demand. However, we did enter the year expecting a continued high demand situation. I think, you know, external variables or whether it was the war or, you know, the impending recession talk or higher interest rates, the funding fees for certain sectors, all of them have had their play out in some way or the other in muting demand in certain sectors. Some sectors continue to grow and have demand. I think from that perspective, yes. I mean, there was a knee-jerk reaction when COVID happened. There was a knee-jerk reaction on the reverse, when it went away. This year has been more of a continued play in a so-called stable environment with macroeconomic headwinds, some different areas. To that extent, I think a sustained play out to growth, is what we are looking at in general staffing. I don't think there is a quantum jump that is going to happen. Understood. Also, on the cash, or the use of cash, you know, Ramani Dathi briefly mentioned that you'll be looking at some inorganic acquisition piece as well. Will you be looking at the higher margin specialized staffing business, which, you know, looking at the scenario, some businesses might be available at bargains in the coming quarters? What's the thought process there? Clearly, I think the inorganic opportunities are being explored in areas of profit, profitability and margin play that complement our portfolio at this point. Yes, we have been looking at opportunities in specialized staffing. We have been looking at opportunities in HR tech. We have been looking at opportunities in RecTech. Areas that effectively will complement us and will enable us to grow, which also bring in some element of a platform or a team or a client base. In EdTech also, we've been looking at opportunities there. Obviously, given the market, there is no profitability, but we are looking at, you know, the platform that has been built come in at a cost and stuff. Different opportunities, but largely yes, looking at M&A or inorganic complementing profitability over a period of time. Alok, our ticket sizes will not be at a very high value. It will be more or less in the range of what we have done in the past. As Ashok mentioned, we only focus on businesses which are profit accretive to us and in the higher margin businesses. Because in general staffing, we are adding headcount. Maybe this quarter the momentum has slightly come down, but otherwise we'll focus only on higher margin investments going forward. Thank you. We have our next question from the line of Amit Chandra from HDFC Securities. Please go ahead. Yeah. Hi, sir. Good morning, and thanks for the opportunity. My question is on the, you know, on the... Sorry, Amit, we lost you. We have lost his connection. We'll take our next question from the line of Chirag Kacharia from Ashika Institutional Equities. Please go ahead. Hello. I have a few broader questions which is between several sectors like IT and ITES. I would like to know your view on the recent global firing in certain top giants of world like Meta and all. Will it have any impact on our Indian hiring freeze in IT sector? Second, how you see the demand environment from IT and ITES sector for the next years and/or a couple of quarters going forward? Because companies in the listed space and even in non-listed space are continuously hiring in past two quarters. Now from here onwards, what's your discussion or negotiation ongoing with these respective sectors? Also, do you see any reduction in the CTC and the variable pay in these sectors due to a slowdown, which has started a quarter back for IT and ITES specifically? From the global point of view, the layoffs that are happening will definitely have an impact on Indian scenario also because a lot of our business is dependent on the U.S. markets in the IT, ITES sector. That will cascade down, and we are already seeing a tightening of hiring across our customers as I gave the input in my call. We already have a 40% drop in the requirements, which has actually led to the current situation. We foresee that this might continue till the time we see a better outlook from the IT, ITES customers. Regarding the salary levels, there was a sudden spike in last year because of the talent scarcity when everybody were hiring and paying double the wages. That is already evened out and now we don't see further reduction in the salaries or variable pays. It will remain the same. The requirement is what we currently have, a slow slowdown. While the salaries may not come down here, the hikes which we have seen in the last two years are upwards of 20%, so the hikes may get corrected. Also non-salary payments like joining bonus and other incentives, there definitely will be a decrease. Sorry, ma'am. Your voice was not clear. Can you repeat what you said? Yes. While the salaries may not come down drastically, the hike percentage will come down because last two years we have seen a consistent increments of 20% on IT salaries. Those percentages will definitely come down. Also non-salary payments like joining bonus and other incentives is where we can see a substantial difference. Thank you so much. That's helpful. Thank you. We have our next question from the line of Amit Chandra from HDFC Securities. Please go ahead. Yeah, good morning, and thanks for the opportunity. My question is on the markup. The markup, if you see it has been almost constant over the last eight quarters. If I see the general staffing margins, and it has been structurally coming down, right? You know, like, one of the levers for margin expansion was obviously increase in markups, which we have not seen, and other was like, as you mentioned, you know, the cost-cutting initiatives that you have taken. How do you see the markups panning out? Are we seeing some improvement there? In terms of the margin improvements for the general staffing, only the cost-cutting initiatives is sufficient to increase margins, sir? Ideally, Amit, from our perspective, improving margins and controlling costs would be the right way to drive the margin improvement in the general staffing business. As you called out, we have had a flat realization in general staffing. The last two years have also been tough negotiations with customers to hold even to that, just given the element of, you know, the COVID, the pandemic payout and the discounts that customers were expecting and all of that. I think, yes, whatever we have been able to upsell or cross-sell to customers has been absorbed by discounts or the negotiations that have played out. It's not a happy situation to be in, but you know, it is something like I called out earlier, we would like to address by being able to upsell and cross-sell as we go forward. I think purely from our perspective, trying to drive that INR 700 up is on the agenda. Haven't been successful primarily given the competitive play in the market. Other than that, I think, trying to improve margins is largely through productivity, which is to say that, you know, the technology initiatives or other that we are doing at the back end continue to play to FTE improvement and contribution improvement at the bottom line. That we believe still has headroom to play out and is something that we are focusing on as we go forward. Okay. On the Specialized Staffing, you mentioned that the volume decline is primarily due to, you know, scaling down in one telecom client. Ex of that, how much decline we have seen in the IT staffing this quarter? You also mentioned that there has been a 40% decline in, you know, the open positions. That is primarily related to IT or this is overall for the whole specialized? Also if you can, you know, also, you know, explain how the margins will pan out for Specialized Staffing, especially, you know, if it's, if we are seeing some salary cuts or salary decline there. Also in terms of, in terms of markups, how it is in Specialized Staffing in terms of fixed and variable. We've actually—I mean, net of the, you know, telecom mandate that we lost, we actually added 2% growth in associate count, if I were to negate that. Like I called out earlier, it's kind of been flattish from a growth perspective on head count with most of the negative growth additions that we are doing being complemented by attrition or absorption at the client end. In Specialized Staffing, we are primarily on a rate card model. It's not so much a PAPM model where effectively, you know, we work on a rate card. Net of the CTC of the employee is our realization. There we are at a double-digit net realization at a margin level. Since, you know, we have to do 100% of the hiring and have a large support mechanism from a client perspective, we come down to that 8%-8.5% as a net margin aspect thereon. Our belief at this point, Amit, is that, like I called again, I repeated that, you know, we do have growth headwind. At this point, we are not seeing any margin headwinds. I think if we hold our employee base, if we are able to deliver at the cost that we have, we should be able to sustain our margins in Specialized Staffing. Thank you. We'll take our last question from the line of Aejas Lakhani from Unifi Capital. Please go ahead. Mr. Lakhani, please unmute your line. Hi, are you able to hear me? Yes, please go ahead. Yeah, thanks. Thanks for the opportunity. Just want to understand that INR 700 markup that you charge, could you speak about, you know, has there been any inflation-adjusted growth in that number over the last few years, or has that been fixed? You know, your propensity to even take inflation-adjusted increases in that markup. Yeah. As per agreement, we do have it with customers that there will be an annual hike on the realization, but the reality comes down that when we have to get the hike or when the contract is being renewed, it is by mutual consent, and customers do flow back to holding it at the same point. In the last two years, we've actually had a throwback to give further discount, given the challenges that corporates were facing. To that extent, over the last four to five quarters, we've kind of been flat on that absolute value, playing out as an average across a large client base. We have not been able to factor in the aspect of inflation, hike on a continuous basis from the customer. We do have a challenge on that. Like I was mentioning in the earlier question, our leverage to an element of profit increase has largely been FTE and productivity. Thank you. Ladies and gentlemen, due to time constraints, that was the last question for today. I would now like to hand the conference over to the management for closing comments. Thank you, Ajit. Like we called out. I think we still stay extremely positive on the long-term opportunity of the market that we play in. The portfolio that we have built will enable us to drive the volume and value growth over a period of time. We have chosen to be in a volume business with high transaction activity on a continuous basis. It's a conscious choice, and we will kind of drive on that. The product portfolio that we have been building should complement that as we go forward. I think some of our businesses where we were in an investment mode have gotten to profitability. A new area of HR Tech that we are looking to invest in. Having said that, none of these will be large-scale cost structures that overnight flip our margins of what we have. We should be able to incrementally work on improving the margins as we address the element of scale growth from general staffing at this point with some headwind in DA and specialized staffing. The team exists to kind of play to the opportunity as it opens up. I think we will stay conscious of growth, profit, profitability, margins and capital investment as a continuous focus. Thank you very much. Thank you. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.