Ladies and gentlemen, good day and welcome to the TeamLease Q2 FY27 conference call hosted by HDFC Securities. As a reminder, all participant lines will be in the listen-only mode, and there'll 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 and then 0 on your touchtone phone. I now hand the conference over to Mr. Arjun Savla from HDFC Securities. Thank you, and over to you. Thank you. Good evening, everyone. On behalf of HDFC Securities, we welcome you all to the TeamLease Q2 FY27 earnings call. Today we have with us the management of— management team of TeamLease represented by Ms. Suparna Mitra, Managing Director and CEO, Ms. Ramani Dathi, CFO and CEO, Ms. Neeti Sharma, CEO Specialized Staffing, and Mr. Balasubramanian A, Senior VP Staffing. I will now hand over the call to Ms. Suparna Mitra for the opening remarks, post which we can open the floor for Q&A session. Thank you, and over to you, Suparna. Thank you so much. Good evening, ladies and gentlemen, and thank you for being with us today. I'll share my perspective on the quarter and on the priorities, uh, after which of course we will take your questions. and of the expectations of our stakeholders. At the same time, the actions we are taking will position the business on a stronger and more profitable footing. in the future. The revenue for the quarter was ₹3,086 crores, which is up 1% sequentially and year-on-year. For the half year, revenue grew 4% to ₹6,142 crores. Operating EBITDA was ₹44 crores, up 17% sequentially. and 5% year-on-year. For the half year, it grew 11% to ₹82 crores. It is encouraging that our operating businesses are growing profit faster than revenue. Reported EBITDA was ₹36 crores, a margin of 1.2% and higher sequentially. Year-on-year, it reflects our investment in the brand and marketing revamp and buyback-related costs held in unallocated. Profit before tax was ₹30 crores, up 2% year-on-year. For the half year, it was ₹66 crores, up 19%. For clarity, this includes other incomes such as interest on income tax refunds, refunds received in Q1. Operating EBITDA remains the better indicator of underlying progress. Profit after tax was ₹26 crores. Our headcount moderated to about 333,200. The first half of FY27 has been a period of deliberate reset for TeamLease. We recognize that this quarter's results fell short of our own aspirations Sorry, 333,200. We added 114 new logos, including 32 in general staffing, of which more than 3 quarters were onboarded under the variable engagement model. 30% of the associates we hired were first-time job seekers, which remains central to our purpose of putting India to work. DSO held at 6 days. Specialized staffing continues to be a strong contributor. Revenue was ₹190 crores with EBITDA growing in double digits sequentially. The India business earned a 7.6% EBITDA margin and global 4.3%. GCCs contributed over 69% of the segment revenue, and we now serve more than 135+ GCC clients. Up from over 110 at the end of last year. This is the profile of business we intend to grow. In HR Services, revenue rose sequentially on EdTech seasonality with the segment EBITDA margin of 3%. We are focused on strengthening the commercial engine of HR tech solutions where the opportunity is significant. Our priorities rest on 3 pillars. First, a sharper focus on higher margin businesses. We will direct capital, talent, and leadership attention to businesses with the strongest returns. Including international geographies, while pursuing growth in general staff. Second, disciplined portfolio management. Every business and investment will be assessed on returns, strategic fit. The divestment of our 30% stake in Crystal HR completed this quarter with no loss on capital invested. Is an early example. We may have to weed some of the non-aligned businesses which allow bandwidth to seed new verticals. Third, to establish TeamLease as a holistic talent partner— solutions partner. We bring recruitment, staffing, apprenticeship, productivity, compliance, and HR technology under one relationship, and we believe this will deepen client accounts, improve cross-sells, and lift margins over time. To enable this, we are investing in sales productivity, hiring, AI and digital capability, our brand, and leadership depth. Our core team has grown to about 2,790 from about 2,500 in March. These investments weigh modestly on near-term margins and on productivity per core employee. We expect them to build a stronger platform for the years ahead. Our balance sheet remains a source of strength. After completing the ₹258 crore buyback in July, we hold ₹350 crore worth of net free cash. With about ₹160 crores of TDS receivable outstanding. Funding exposure in staffing was 16%. The long-term opportunity is compelling. Formalization of India's workforce is deepening. The central rules under labor codes have been notified, and GCCs continue to create demand for specialized talent. TeamLease is positioning itself to lead in that environment. Thank you for your continued support. I now hand over to my colleagues for their comments. I'm happy to take your questions after that. Thank you, Suparna. Good evening, everyone. In Q2 FY27, we closed the quarter at approximately 2.85 lakh associates, which is a net reduction of about 5,500 associates. On our Q4 call, we had guided an exit of roughly 10,000 associates across low-margin mandates through Q1 and Q2. One client within that book which was running at a negative margin exited this quarter with over 7,000 associates. Adjusting for that, the underlying business still added about 1,500 associates, and since that mandate was margin dilutive, the exit is accretive rather than being neutral. Cross-hiring was at our highest in 3 quarters at about 62,500 associates. So fulfillment was not so much the constraint. The underlying addition was nonetheless thin, and one of the reasons is BSSI. Sectorally, BSSI declined for us in aggregate, but not because we lost the ground commercially. We gained wallet share at select private banks, small finance banks, and mid-sized NBFCs and continued to shift into Tier 2 and Tier 3 markets. That progress was outweighed by reduction in a few large accounts. Where clients ran their own productivity and cost optimization programs. This is visible across the industry, not just in our group, and our commercial position in BSSI is stronger than the hedge fund line may suggest. Consumer was the offset and it was genuinely strong. Durables ran well ahead of last year through the summer and into the festive build, and our retail and e-commerce volumes both grew, led by, uh, Uh, yeah, QuickCommerce. Those gains were large enough to absorb the BFSI decline and still leave the underlying book positive. Just one small call out on the festive calendar because it affects how the closing number varies. Diwali fell almost 3 weeks later this year compared to last year, and the season arrived in distinct clusters rather than as one continuous buildup with a quiet stretch at the end of September. So our September 30th headcount was therefore measured between clusters. Looking forward, the lower peak and the longer deployment window would lift the billable days for associates across Q3 and The demand now runs deeper into Q3 this year than it did last year. From a commercial standpoint, we added 32 new logos with about 75% of them under variable markup or outcome-based pricing. The GST 2.0-driven exits that we flagged last quarter also played through as expected with nothing incremental. We also continue to shift towards non-metros where average salaries run 20 to 30% below urban markets. On sourcing, over 19,000 joinies, or about 31% of the overall gross joinies, came through our own hiring efforts. Against 28% in Q1. We had said at the start of the year that rebuilding own sourcing was a priority for H1, and this is that work coming through in telecom. The direction of travel seems to have changed. Until last year, operators had expected automation and autonomous networks to steadily, steadily reduce frontline headcount, but for a large set of field and customer-facing roles human deployment in the India cost context remains both more effective and cheaper. Hiring has ramped up in multiple pockets as a result, and we gained wallet share in several of them. In industrial, power transmission and distribution rollouts are resuming where approvals had stalled, though unevenly, and the structural opportunity is unchanged with a large awarded order books still to execute. On the regulatory front, the EPF wage ceiling went up in September and stays under the labor codes, continue to be notified. Both raise statutory employer cost, which is contractually recoverable from our clients under existing agreements. So we do not expect a P&L impact on the associate book. We had readied our systems ahead of this and were able to implement initiatives immediately. Our attention is instead on associate take-home, which these changes reduce, and retention is the real exposure we are managing account by account. Operationally, technology remains the core of the thesis, and 3 investments are worth flagging. We are partway through a ground-up overhaul of our associate lifecycle system, with some elements already live, more going live in Q3, and a full rollout expected in Q4. Alongside that, secondly, we are integrating our client and associate databases so that commercial and workforce intelligence would be available on demand rather than assembled on request. And last but not the least, we continue to apply AI and automation to simplify process-heavy workflows, which is where the operating leverage comes from. Our associate care offerings continue to expand. And continue to build nonlinear revenue. Looking ahead over the next 3 to 6 months, we enter Q3 with the festive deployment in hand and the longer season behind it, over 16,000 open positions. And a healthy pipeline. Clients are planning in shorter cycles than they used to, so we expect them to stay deliberate. What we are confident about is the engine underneath, the commercial discipline, cost-to-hire reduction, and the technology investment built over the last 2 years convert into earnings growth whether or not volumes run ahead. And that is what FY27 rests on. Thank you everyone, and with that I would like to hand it over to Neeti. Thank you, Bala. Good evening, everyone. Hiring across the IT services companies in the last quarter has still stayed cautious. Most of it has been replacement hiring rather than new roles. However, the roles that have been hired were more skilled and of higher value. While the net additions in the sector are still not showing up, each of the IT services companies are hiring AI talent at every level. Whether it's at core AI work, AI adjacent roles, or support roles. Demand during the quarter was led largely by AI/ML engineers, data engineering roles, cloud, DevOps, cybersecurity, and, and SAP skills, while hiring for legacy and generalist roles largely stayed moderate. We are also seeing rising demand for cognitive skill sets such as FDEs and graph engineers increase quarter on quarter. Against this backdrop as well, we've maintained our growth trajectory of previous quarters. EBITDA grew 15% over last quarter and operating margin went up by 90 basis points. 3 things drove this: better pricing, a richer mix of skills, and improved productivity at our teams. We ended the quarter with 7,670 associates across IT and specialized skill sets. And our PAPM has gone up by about 10% over the last year. Customer acquisition remained healthy with about 60 new logos added in the last 2 quarters. About 16 GCCs are included in the 60 new logos that we've brought on board. We also grew our wallet share with existing customers through multi-product deployments and broader partnerships, which gives us better revenue visibility for the coming quarters. Earlier this year, we launched our AI talent learning advisory and services program called Atlas, which brings together everything we offer to help companies with their AI transformation. Under the Atlas program, we've placed more than 800 AI professionals in H1 and worked with over 25 clients on their AI learning advisory and transformation programs. Outside of technology hiring, we've kind of hired for domain specialists that continues to grow in demand in engineering, R&D, automotive, healthcare, life sciences, BFSI, and F&A skills. GCCs are still the biggest driver of demand for us. We now work with more than 130 GCCs across industries, up from 110 at the end of last financial year. Together they make up for about 60% of our associate headcount and about 69% of our net revenues. Our full-stack GCC offering, TeamLease CapQ, supports GCCs at every stage. When they are launching, we help them with their hiring strategy along with their compliance, legal, and infrastructure requirements. As they grow, we help them scale, keep their talent, and build new capabilities for expansion and transformation. This is helping us engage with GCCs in their nascent stages and grow alongside with them. Our global business is growing as well, with revenue up by about 51% over last year. We stepped away from some low-margin mandates globally, and our global operating margins have gone up to 5%, up from 3% in the last quarter. We now have more than about 100 people outside of India, and we, we are continuing to strengthen our global delivery from India for our global requirements as well. For the second half of FY27, we will keep building depth in, in high-value areas such as AI, GCC specialist domains, and global business. At the same time, we will keep pushing profitable growth through better pricing, a better skills and product mix, and a higher employee productivity. Q3 usually has furloughs for us. And we have already planned that in our numbers for the year. As companies move from trying out AI to actually using it at scale, they will need more specialized AI-ready talent. Our investments in building capabilities for hiring AI talent at scale, stronger GCC relationships, a growing global business, and steady execution We believe we are well placed to keep growing profitably and to create long-term value for our customers, associates, and stakeholders. Thank you, and with that, I would like to hand it over to Ramani. Thank you, Neeti, and good evening everyone. This is Ramani. Let me take you through the financials for the quarter and the half year, and then we'll open up for questions. Starting with the headline, consolidated revenue for Q2 was ₹3,086 crore, up 1% sequentially and 2% year-on-year. For the half year, revenue was ₹6,142 crore, up 7% sequentially and 10% year-on-year. Up 4% year on year. Operating EBITDA, which is the business profit before corporate and unallocated costs, was ₹44 crore for the quarter. That's up 17% sequentially. and 5% year on year. And for H1, it's up 11% at ₹82 crore. The operating line improved, mainly led by specialized staffing and It takes seasonal pickup. EBIT was ₹30 crore, up 2% year on year and down 18% sequentially, largely because of tax refunds in Q1. Adjusted PAT was ₹26 crore before exceptional items. For the half year, EBT grew 19% to ₹66 crore and PAT grew 14% to ₹60 crore. Operating EBITDA margin improved sequentially. Specialized staffing EBITDA was up 15% quarter on quarter to ₹13 crore. HR services moved from a ₹2 crore loss in Q1 to a ₹2 crore profit in the current quarter, mainly led by EdTech business. At the reported level, EBITDA was down 6% year on year, and this gap is mainly on account of unallocated cost. Corporate EBITDA was ₹8 crore cost this quarter against ₹4 crore a year ago. That reflects buyback-related expenses and some of our planned investments in brand, technology, and people. On PPT front, we had ₹12 crore of non-recurring other income. in Q1, because of which there is a dip in sequential PBT in Q2. The operating businesses added about ₹5.8 crores. That was more than offset by the ₹12 crore lower other income. On balance sheet front, we closed the half year with net free cash of ₹350 crores after completing ₹238 crore of buyback in July. Cash and investments on the balance sheet were about ₹526 crore against ₹772 crore at March, and the reduction is almost entirely on account of the buyback. TDS receivable stands at about ₹160 crore. We continue to pursue refunds for later assessment years, and we received ₹38 crore in Q1 of this year. Coming to capital allocation, 2 portfolio actions were completed in the quarter. First, the buyback leading to 8.87% pre-buyback paid-up capital was completed on the approved terms. And funded entirely from the internal accruals. Second, we divested our 30% stake in Crystal HR under the put option. We recovered our full original investment with no loss on capital invested. With ₹350 crore of net free cash, our capital priorities are in order. Investment in technology, people leadership in the core, then disciplined margin-accretive acquisitions. In adjacencies. We are evaluating opportunities for M&A and have nothing at advanced level to disclose today. Anything material will be disclosed to the exchanges as and when required. Thank you. We can now open for questions. Thank you. We will now begin the question and answer session. Participants who wish to ask a question may press star and 1 on your touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. We have the first question from the line of Amit Chandra from HDFC Securities. Please go ahead. Yeah, thanks for the opportunity. Ma'am, my first question is on the general staffing segment. Obviously, we have seen some margin expansion at the overall company level, but if I see the overall addition in terms of net associates, it has been pretty soft. Obviously, we are shifting towards more higher margin mandates and we are doing some restructuring and in some of the accounts which you have mentioned last time. So in the existing base we have for general staffing, do you think that we have hit the bottom in terms of the, you know, headcounts and maybe we can head towards 5 to 6% kind of a volume growth on a steady state from here on, or there is still, you know, some kind of restructuring or some kind of, uh, you know, exits that is still pending in some of the accounts, especially in the BFSI and the other verticals. And obviously it's very good to see that you have included a lot of new data points in the PPT regarding the segments. So in that, I see the industrial segment is still high single-digit kind of a number. Maybe if you can, you know, uh, indicate that how these segments may be like in the next 1 or 2 years. the focus segments where, you know, the incremental growth can come in? Because if I see the, uh, you know, if I see the peer performance, they have been growing pretty well and they have been adding a lot of Uh, associate. Is it, uh, more like increased competition or is it more like restructuring at the company level? Thank you. Yeah, thanks for that question. I'll, you know, start off and then I'll request my colleagues to join. So I think as far as general staffing is concerned, we are very much focused on headcount addition, profitable ones, and the focus and the strive towards adding new clients and mandates and getting the headcount numbers up is very much part of our H2 plan. Yes, there is, you know, greater analysis on the kind of mandates, on the kind of industry, and we are more careful about what we are pursuing. But it is not only a profitability, you know, direction. It is profitable growth. Growth is very much on our agenda. And the growth will come from headcount, and we are totally focused on it. Um, yeah, I will request Bala to add some more points, and then, you know, you're referring to a particular slide on the investor deck. We can also take you through a little bit on that since you've mentioned that. Yeah, hi, Amit. The softness on numbers really is, you know, on a couple of quarters we had some one-off situations because of which the underlying growth in the overall business got completely obscured. But if you were to just look at those numbers aside and look at the underlying growth instead on a standalone basis, then clearly it shows 2 things. One, that the business is resilient, and 2, that the growth is also coming from a diversified portfolio that we have been able to build over the last few years. While we started showing these numbers for the last 3 years, if you were to step back and look at this 5 years ago, you would find that we were largely indexed on pretty much just BFSI, consumer, and telecom. The other 3 portions pretty much didn't exist at that point in time. But now I have the 30% comes from the non-BFSI and consumer and telecom portfolio, clearly. So that's one callout. And secondly, yes, uh, the other softness from a CAGR standpoint that we are witnessing in the last 18 months compared to the previous, I would say, 3 or 4 years is also because of some tentativeness on part of our clients. stemming largely from the fact that there is a lot of uncertainty driven by external macro environment, and there was also a lot of positivity with respect to what AI can do. for their business and can it really substitute some of the manpower that we have, if not— I mean, just some of them, not all. But then clearly it is now seen as a productivity enhancer and not really a substitute for at least the kind of people that we manage in general. Like I called out in my uh, you know, earlier briefing about Q2 as well. Specifically in the telecom industry, it's a very clear 180-degree turn that we are seeing, and we are seeing a similar narrative across various other industries as well. So we are confident on us being able to deliver consistent net adds going forward. With respect to what the percentage is going to be, I think it's very difficult to quantify that presently. Okay, and, uh, ma'am, you mentioned about that we are seeing healthy PAPM growth, like you mentioned about 10% kind of a PAPM increase, so that is coming mostly from the variable contracts that we have signed, or is it more coming from the existing, uh, like existing clients as well? And in the PPT, uh, you know, we mentioned Uh, number of PAPM, the, uh, ₹600 PAPM as of, uh, the Q2. So if I'm not wrong, the, uh, the PAPM earlier used to be Around ₹650-670. So the ₹600, how it adds up for the 10% growth, can you please explain? So, uh, Amit, hi, Neeti here. I had mentioned about a PAPM growth for specialized staffing going by up by 10%, and that is largely, uh, you know, subject to the hiring and the profiles that we are hiring. So we are doing a lot of AI hiring, data engineering hiring, so they come at a higher value and higher rate card, which is where our PAPM has gone up by 10%. Okay, and for the general staffing business, the PAPM, uh, has been declining, uh, because it used to be in the ₹650-660 range. Now it has come down to ₹600. So how do you see the PAPM Uh, like panning out and where the growth will come from, headcount, PAPM, and, uh, you know, if you can give some margin guidance or the EBITDA guidance that you, you know, earlier provided in terms of the overall EBITDA growth for the next year. Hi Amit, this is Ramani. Staffing PAPM has in fact marginally improved. So staffing, we are currently at 700 PAPM. Maybe that 600 number you are referring to is for apprenticeship business. So India, it's about 600 average PAPM. Staffing is 700. Okay, okay. And, uh, you know, my last question is on the divestment that we did, uh, like obviously, uh, you know, we— you mentioned that you have not had any capital loss. And we had also had the exceptional item, some amount of exceptional item in this. But now the whole rationale, because it's been a transaction which is not even like 2 years old, and, uh, initially we spent like ₹30 crores— or sorry, ₹25 crores, uh, for the 30% stake, and we are now, uh, now, uh, selling it for ₹10 crores. So how Uh, there is no capital loss, if you can explain. Amit, uh, we have invested about ₹10 crore to acquire the 30% stake and we recovered that ₹10 crore. So there is no principal loss on this investment. And the reason for divestment is also the fact that the SaaS businesses, uh, at this stage, especially with AI and other digital interventions that are happening Many of the SaaS businesses are undergoing very difficult situation, and we thought it's better we take the call right away while we have the— while we still have the call option, because we are a minority shareholder in the company. Otherwise, if we extend it for a few more quarters or months, we may have to acquire a balanced stake. So that's why it's a call that we have taken to exit while being on minority front. and come out of the SaaS side of the HR tech business. Okay, and any plans for the existing, uh, the HR, HR, HR, uh, like business? Because that is also being loss-making for a very long period of time. So any plans for, uh, either restructuring or exiting that business? Definitely, Amit, as Suparna mentioned in her opening remarks, so we are doing a lot of realignment to our portfolio. We may have to bring in some of the new offerings that we currently not having, as well as may have to weed some verticals or sub-verticals where we don't see any major uptick in the demand. Okay. Okay, ma'am, thank you and all the best. Thank you. Thank you. We have the next question on the line of Bhargav Buddhadev from Ambit Asset Management. Please go ahead. Yeah, good evening team and thank you for the opportunity. So ma'am, in your opening remarks you did mention about pursuing some M&A opportunities. So is it possible to elaborate a bit on them in terms of which areas are you looking at, what could be the size, minimum ticket size which you could be looking at? And also in terms of timelines, uh, what could be the timelines that you can work with? So, uh, it's still in very initial stages and it's really— we are working on a framework on what kind of opportunities in M&A we will pursue. I think at the very top level, we are looking for opportunities that are either scale opportunities, which means we are already in that business and we can scale up, uh, you know, through an M&A. Or we are also looking at some opportunities which will allow us to enter a new business vertical in the larger, uh, you know, solutions business that we are in— talent solutions, staffing, etc. So anything which is adjacent and which can give us entry to new businesses. Obviously, the— I mean, the ticket size and all is still very early to talk about it, but I think one guiding principle that we are using is it needs to be a high margin business compared to our current overall weighted margin of the organization. Understood. And in terms of, uh, if you look at your competition, your competition is reporting much better volumes in terms of headcount. So is it that you are deliberately leaving those businesses to them because of lower margins, or Uh, how should we read into that? Uh, you know, in an earlier question I answered this. We are very much focused on growth, and growth comes from headcount. I think this was a particularly weak quarter, but that's not the intent. The intent is to grow headcount, and I think we will be back with more robust headcount growth in the quarters to come. And lastly, uh, in terms of the benefits from the labor code implementation, uh, I guess we had spoken that there could be some consolidation in the industry. Uh, when do we see that? Uh, any, any, uh, color on that, uh, which you can provide? Yeah, hi, uh, Bhargav here. Yeah, um, even now not 100% of the clients in the staffing ecosystem have gone live with the labor codes. In fact, implementation started in earnest only the beginning of this financial year while they were actually notified in November of 2025 itself. And like I said, even at this point in time, there is still some ambiguity with respect to how exactly clients want to do it. In fact, many clients chose to do it along with their annual appraisal cycle. Some have it in April, some have it in July, some even have it in October in sync with the festive season, which is why now we are at the tail end of labor codes getting implemented. And then, like I had called out as well, in September we had this announcement of the PF ceiling going up, that too with immediate effect. So that's just you know, thrown sort of one more complication into the way in which clients are going about factoring in their budgets for this financial year. So we need to really wait for these things to settle down and for clients to really see how things are panning out post the implementation of both these aspects. And only then we'll be able to start seeing the true benefits of large-scale formalization, acceleration of the pace of formalization, hence room for consolidation. So in the immediate upcoming quarters, we don't really see that happening in terms of the market consolidation that you just spoke of. Okay, sir. Thank you very much. Thank you very much. All the very best and wish the entire team a happy Diwali. Happy Diwali to you too. Thank you. Participants who wish to ask a question may press star and 1 on your touchtone telephone. We have the next question on the line of Dipesh Mehta from Emkay Global. Please go ahead. Yeah, thanks for the opportunity. A couple of questions. First question on the general staffing, uh, headcount addition. So associate addition, if I look, let's say Or since FY24, H1 number, if you look at it, CAGR perspective, it is only less than 2% kind of CAGR. Now it is 2.5-year kind of journey I am referring to, not 1-2 quarters. Uh, how to look this, uh, trajectory, uh, from medium-term perspective and how you expect H2 to play out from headcount addition perspective? Because in one of the question answers you said headcount addition is the priority. If you can give some sense about how to expect, uh, this to change. Uh, second question is, what is the open mandate at the end of Q2 we have? And considering that open mandate, and festival period and all those things. From mix change perspective, how one should expect some of the composition? This time you disclosed some of the vertical mix as well. How you expect it to evolve from medium-term perspective considering 2 factors? One is your margin aspiration. Uh, and second thing is market opportunity available. So considering both the things, how you expect it to evolve in over medium term? And related question is the progress on direct sourcing, particularly let's say when you want to address manufacturing, construction kind of vertical which are relatively high margin, uh, less penetrated so far. So if you can give some sense how you are trying to, let's say, develop capability to tackle this part. Thank you. Great, uh, thanks for that question. Uh, I was able to break down what you asked into 5 distinct aspects. Sorry, Bala, your voice is muffled. I can't, uh, hear it clearly, and even your prepared remarks we could not understand very clearly. If you can Ask it closer to mic. Uh, is this better now? Are you able to hear me? Yeah, we can. Okay, good. Uh, no, so from what you asked, I was able to break your question down into 5 distinct aspects, and I'll try and quickly answer them one by one. So with respect to the numbers, as you all know, these numbers are reported. We were able to double our headcount in general staffing over a period of 4 years from March 21 to March 25. Uh, in the last 12 months specifically, like I said, there were a couple of large opportunities. I think one was an absorption, uh, which was initiated by, uh, one of our large clients. The largest HDFC client at that point in time because of an RBI regulation, uh, where the total impact was about 28,000 associates. And, and then there was one more callout of a low margin or a negative margin account which went off with about 7,000 associates or so. So that's about 35K which happened. In the last, uh, 5 quarters, to be precise. And in the last 12 months, uh, specifically in the last 4 quarters, I guess it was just 5,000 or 27,000, and it was really Uh, not really easy in the present softness that we see in the macro environment for the reasons that I called out earlier with respect to— uh, sorry to intervene, your voice is getting muffled, difficult for us to understand. Okay, hi, uh, is this better now? Can you hear me? Yeah, yeah, please. Yeah, no, as you were saying, uh, this impact of 35K over the last, uh, 5 quarters and 27 specifically in the last, uh, 12 months, uh, has not really been easy for us to tide over and deliver a net positives which are substantial, especially given the current softness that we are seeing in the market with respect to the changing external market environment. Uh, largely capital markets not really performing well over the last 2 years plus, particularly, and hence customers thinking twice before, uh, you know, ramping up the way they did between FY22 and FY25. Uh, so that is, that is one aspect which has sort of held us back. And, uh, and like I had mentioned in the previous question's response too, we don't really see the same sort of situation continuing, and we should be in a position to, uh, you know, add headcounts, uh, along the lines of what we used to do, uh, you know, until about a year or so back. Going forward. And I had also called out to your second question earlier that the present open positions we have is about 16,000. And this is also connected to the third aspect that you asked, which is regarding the festive season. So unlike, uh, you know, last year where Diwali was in the middle of October, now it's in the second week of November. So your festive season is not really one big spike or one big buildup. It could be broken up into clusters. So you, you had a bit of a fad, uh, end of the second cluster towards the end of September, and then there was a buildup happen. There is a smaller buildup, of course, which will happen in the first week of November, and then it will completely, uh, taper off. So that's how this season is, and it's been much more of a start-stop, uh, and much more dynamic sort of a hiring, uh, pattern that we have seen this year compared to the last few years. And customers customers are far more deliberate with respect to their ramp-up plans and also selective with respect to where they want to do it, not just the timing of it. So that's the change that we see. this year. And then moving on to the next one that you called out with respect to the large or the higher margin opportunities. See, uh, manufacturing and logistics, yes, has been an area of focus for the last 2 years, and I think we've gotten significant traction in the logistics space, not so much in the manufacturing space, while manufacturing has been a strong area for us, uh, with respect to the white-collar profiles really, and not so much in the mass market entry-level blue-collar people, though that's something we are working on. maximizing. But then I would really, uh, ratify that statement though. I don't really think manufacturing and logistics as a whole presents high margin opportunities throughout. It doesn't work like that exactly because there is also a lot of informality that we see in that segment. So we have to be really selective with respect to the kind and quality of clients that we want to work with over there. Uh, and yeah, so last but not the least, like I said, the the mix of industries has already been called out now for the first time, and we've shown that for the last 3 years, and we've given indications as to which industries we see will probably move the needle going forward. Yeah. One question was about the direct sourcing capability. Uh, can you give me some number? Let's say, uh, whatever addition in last 12 months we might have What would be the direct sourcing sale in that? Yeah, uh, so like I called out earlier, about 19,000 of the gross additions of Q2 were delivered through our own sourcing, which is, uh, 31%, up from the 28%, uh, that we saw in Q1. And, uh, very clearly the kind of mandates that are coming up, uh, you know, where there is a significant growth opportunity require us to be able to hire through our own. means. And here is where we have to do a balancing act of not just ramping up in terms of our scale and capacity, but also being very mindful of the cost per hire, which I had also called out earlier, that is something which has really been helping us in the last 1.5-2 years. Using, uh, technology and using multiple different sourcing channels has come to our aid with respect to being able to do this balancing act. Also, just to add on the hiring aspect, Dipesh, while this quarter our own sourcing is about 30%, it ranges between 30 to 50%, uh, because particularly in this quarter we got some rebadging opportunity with few clients, because of which direct sourcing by clients is higher in this quarter. So across, uh, last few quarters, if I have to take the average, we've been maintaining upwards of 40%. of own sourcing by TeamLease. And how the cost of sourcing— let's say I am referring to direct side— with the use of technology, can you help us understand how it is evolving for us in, let's say, last 12 months, 24 months, whichever you can give some sense? And how you expect it to evolve going forward? And all, right? You want to talk about that? Yeah, so cost of hiring, uh, or cost per hire, it varies from industry to industry depending on the profile. So typically for manufacturing profiles, currently the cost of hiring is the highest, almost about ₹3,000 per hire. So whereas in FMCG, FMCD, it is as low as like ₹1,000 per hire. So it depends on the profile, the location, uh, client, many aspects come into it. But if I have to take it at an average level over the last 18 months, uh, through our investments in hire-tech, we have brought down the cost per hire by almost 30%. Within general staffing business and in specialized staffing by almost 40%. Okay, okay. So broadly, let's say because of reduction in cost of hire, one should expect you— our margins would have some benefit, uh, on sustainable basis now. Any ideas? That's right, Dipesh. So, uh, we are expecting operating leverage coming in from staffing business with the volume coming back on track. And at group level, the margin expansion would be led by other higher margin verticals like, uh, far more higher growth coming from specialized staffing and HR services. And the other question which I have is about— I think partly you touch upon PF ceiling, uh, changes. How do you expect it to, uh, implication on our business? In next, let's say, 2 to 4 quarter perspective. And the last is about the FT productivity. I think this time you indicated about 289. Can you give me comparable YOY QOQ number? Thank you. Yeah, hi. Uh, regarding the PF ceiling, uh, going up again, in fact, uh, surprisingly and thankfully, most of the clients, uh, have understood and aligned with, uh, the fact that this is something that has to be complied with on an immediate basis, unlike the Labour Codes, which was something that got stretched out over a year ever since it got notified. This is something that clients understood that they have to implement immediately. And what a lot of them seem to have done is to take a middle path rather than passing the entire impact to the associates. Especially this happening right ahead of the festive season. Many of them have opted to absorb the employer contribution impact onto their books, which is by way of increasing the CTC. And then the impact in the own contribution has been passed on to the employee. So essentially the CTC has gone up, but the net take-home may have actually— may have marginally come down. So this is, uh, what we have actually seen. And as far as our P&L is concerned, while the gross revenue would definitely go up because CTCs are going up, but then the actual PAPM and hence our margins in, in real terms do not really get impacted by this at all. And, uh, I think your other question is on FTE ratio. So this quarter, because of the festive demand, we have added a temporary headcount, especially in staffing and apprenticeship business. By end of this year, the headcount would again come back to normalcy and we get back to earlier, uh, 350, close to 350 of FTE. Understand. Thank you. Thank you. We have the next question on the line of Love Gupta from Counter Cynical Investments. Please go ahead. Uh, hi, thank you for the opportunity. So firstly, I want to ask about the receivables that have increased about 16% from around ₹540 crores to ₹600 around ₹630 crores. So what was the reason for that and how do we see this receivable days moving going forward? Yeah, hi. No, this is just for one day increase in receivables because there is one particular client who asked for ad hoc funding, and as of that cutoff date of 30th September So there is that increase in receivables. The next day we collected that money from the client, so it's not an actual, uh, increase in overall receivables. All right, sir. And, uh, sorry, and, uh, uh, you know, we've seen the top line and the margins there. Like muted for over 4-5 quarters now. So when can we expect this to improve? And, you know, how do we see this growing, going forward? Yeah, so as I mentioned earlier, uh, staffing will focus margin expansion mainly through operating leverage. So we have good pipeline and good number of open positions in general staffing business. And while I can't put down an exact number, uh, in terms of how many basis points of margin expansion can happen on a year-on-year basis, we are confident of maintaining a double-digit growth in the absolute profits of general staffing. vertical. Specialized staffing, uh, we are much stronger both in terms of top-line growth as well as margin expansion this year. So we believe that by Q4 of this year, we should be able to improve at least another 20 basis points in EBITDA margins of specialized staffing business. And on the specialized staffing side, when can we see around 8-9% EBITDA margin as reaching that level? We can't give that kind of exact guidance at this stage. I mean, not just about specialized staffing overall, because there is a gradual improvement in specialized staffing in terms of margins. So with a focus on Atlas, GCCs, and higher margin profiles, so we believe this gradual improvement will contribute to overall margin expansion. All right, thank you. Thank you. We have the next question from the line of Dipesh Mehta from Emkay Global. Please go ahead. Yeah, uh, thank you. Just a related question, your operating cash flow, if one look in H1, it is turned negative now compared to, let's say, 4,500 crore which we have on YOY basis. Can you help us understand? I got one day increase, but I think still there is a sizable gap. Uh, second question is about just want to get some sense about the growth outlook, uh, in some of the segments. Let's say in other HR tech, earlier we used to maintain about, let's say, 30% growth and, uh, Turning profitable and then growing on that. If you can provide some outlook in that business, because in one of the question answers you said we may evaluate, uh, even the business decision on the whether to continue or divest. So just want to get broad sense around it. Thank you. Yeah. So, uh, Deepesh, specific to September month, on 17th of September, with respect to EPFO increase in wage ceiling, so many clients have taken like extra 1 day to validate the invoices and release the salaries. So on account of that, as of 30th September, we have done incremental funding of about ₹120 crore, ₹120 crore. And as I mentioned earlier, that's only for a 1-day ad hoc funding that we have done, so which has been recovered on the next days. So that has led to, uh, the fluctuation in the overall trade receivable as reflecting in the cash flow statement. Um, sorry, I missed out the second part of the question. Yeah, other HR services, uh, since we are doing a portfolio realignment maybe for next 1-2 quarters Uh, we may maintain about 15-20% growth. We may not be able to get to 30% because we are doing, uh, some tough calls on which verticals to retain and which ones to focus more or add new offerings. So maybe 15 to 20% could be the outlook for HR services for next few quarters. अधर ही चार्ट है। And what about the profitability? Profitability should be in the same range, like 5 to 6% EBITDA margin for HR services segment. Thank you. Thank you. Thank you. As there are no further questions from the participants, I now hand the conference over to Mr. Suparna Mitra for closing comments. Thank you all for your incisive and deep questions. They do help us in reflecting on our business and how we look at it. And wishing all of you a very happy and your families a very happy Diwali and a great festive season ahead. And hope to see all of you on the other side of— actually, it'll become the next year, the next calendar year 2027. Uh, all the best to all of us. Thank you. Thank you. Thank you. On behalf of HDFC Securities, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.