Summary
TeamLease Services Limited - Q3 FY26 Earnings Call Summary Wednesday, February 04, 2026, 05:00 P.M. IST
Event Participants
Executives 5 Ashok Reddy (Executive Vice Chairman), Balasubramanian A (Staffing), Neeti Sharma (CEO - Specialized Staffing), Nipun Sharma (CEO - Degree Apprenticeship), Ramani Dathi (CFO & COO)
Analysts 6 Akshay Mehta, Amit Chandra, Bhargav, Deep Shah, Dipesh Mehta, Madhur Rathi, Priyam Shrivastava
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue | ₹891.8 crores | +8% YoY; flat QoQ due to lower gross billing rates in staffing and headcount insourcing. |
| EBITDA | ₹36.0 crores | +22% YoY, +11% QoQ; driven by digitization, cost optimization, and EdTech catch-up billing. |
| PBT | ₹33.0 crores | +69% QoQ; significantly aided by ₹12 crore interest credit on tax refunds. |
| Total Headcount | 296,500 count | Net drop of ~27,000 associates sequentially due to regulatory-led client insourcing. |
| Staffing PAPM | ₹680 | +₹11 QoQ; improvement driven by a higher share of hiring revenue (49% of offers). |
| DSO | 15 days | Group-level DSO remains stable; Staffing specific DSO at 7 days. |
| Cash Balance | ₹430 crores | Includes ₹100 crores income tax refund received during the quarter. |
Geographic & Segment Commentary
- General Staffing: Headcount dropped to 2.82 lakh associates (-21,350 QoQ) primarily due to one large NBFC client insourcing 20,000 roles following an RBI directive. Despite volume pressure, the segment saw 22 new logo additions with 55% under variable/outcome-linked pricing.
- Specialized Staffing: Recorded a second consecutive quarter of net growth (+115 headcount) despite seasonal furloughs. GCCs remain the primary engine, contributing 65% of net revenue and adding 28 new customers across Life Sciences and BFSI.
- Degree Apprenticeship (DA): Faced a net drop of 5,600 apprentices due to regulatory transitions at an NBFC and an agricultural client. Management expects recovery in Q4 FY26 supported by new Union Budget subsidies for NETL (₹1,250 crores).
Company-Specific & Strategic Commentary
- Leadership Transition: Ms. Suparna was appointed as CEO and M.D. to transition TeamLease into a board-run company. Her background in B2C and high-margin product portfolios is intended to drive the shift from B2B to higher-margin B2C revenue streams.
- Digitization & Productivity: Core internal headcount is being optimized in response to associate losses, with technology leverage allowing the company to serve larger bases without proportionate overhead increases.
- Workforce Formalization: 19% of gross joiners in staffing were first-time employees, aligning with the company’s long-term strategy of driving formal employment.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Headcount Growth | Net Positive (Q4 FY26) | Driven by a pipeline of 16,000 open positions and recovery in BFSI/Consumer segments. |
| EBITDA Margins | Sustained Improvement | Expected to benefit from EdTech seasonality in Q4 and continued cost optimization. |
| Capital Allocation | Board Decision (Q4 FY26) | Management to discuss potential buybacks/dividends given the ₹430 Cr cash position and tax-efficient budget changes. |
Risks & Constraints
| Risk | Context |
|---|---|
| Regulatory Sensitivity | Sector-specific directives (RBI for NBFCs, GST for Agri) led to the loss of 27,000 headcounts this quarter; similar ad-hoc directives remain a risk. |
| Macro Consumption | Urban consumption remains subdued; while rural markets show resilience, any slowdown in festive/e-commerce demand impacts staffing volumes. |
| Labor Code Costs | The new labor code notification required a ₹5.7 crore exceptional provision for core employees’ past gratuity/leave liabilities. |
Q&A Highlights
BFSI Regulatory Impact
- Question: Is the insourcing impact from the NBFC client fully captured? (Amit Chandra)
- Answer: The full hit was taken in Q3; no further losses are expected from this specific event. The directive was an ad-hoc RBI action and not a broader structural trend (Ashok Reddy).
Margin and PAPM Drivers
- Question: What drove the PAPM improvement to ₹680? (Dipesh Mehta)
- Answer: A significant increase in internal sourcing for hiring—now 49% of offers vs 36% last quarter—contributed higher-margin hiring revenue (Ramani Dathi).
Specialized Staffing Focus
- Question: How are you navigating the flattish IT services hiring market? (Amit Chandra)
- Answer: While volume hiring for conventional roles (Java/.NET) is down, high-value demand for AI, data, and cybersecurity is increasing, offering better rate cards (Neeti Sharma).
Capital Allocation
- Question: With ₹430 Cr cash, will you return capital via buybacks? (Bhargav)
- Answer: The Board will evaluate capital allocation in the Q4 meeting. Previous cash retention was for inorganic opportunities, but tax-efficient buyback rules will be factored in (Ashok Reddy).
Key Takeaway
TeamLease reported a challenging Q3 FY26 characterized by a massive regulatory-led headcount contraction of 27,000 associates, primarily due to insourcing by a large NBFC client. Despite the resultant flat revenue, the company demonstrated operational resilience, growing EBITDA by 11% QoQ to ₹36 crores through aggressive cost optimization and a higher-margin mix in Specialized Staffing. Strategic focus remains on the Global Capability Center (GCC) segment, which now drives 65% of specialized revenue, and the upcoming leadership transition to Ms. Suparna to spearhead B2C and product-led growth. Management expressed confidence in a Q4 recovery, citing 16,000 open positions and a stabilizing BFSI environment. Investors should monitor the Q4 board decision on capital allocation, given the robust ₹430 crore cash balance and high-interest credits from tax refunds.
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