Thank you. Ladies and gentlemen, good morning and thank you for joining us on the post-Q1 FY27 results conference call for Quess Corp Limited.

It is my pleasure to introduce the senior management team of Quess Corp who are here with us today to discuss the results. We have Mr.

Lohit Bhatia, Executive Director and Group CEO; Mr. Neeraj Jain, CFO; Mr.

Kushal Maheshwari, Head of Investor Relations; Mr. Kapil Joshi, CEO of Quess IT Staffing; and Mr.

Nitin Dave, CEO of Quess Staffing Solutions. We will begin the call with opening remarks by the management team, and thereafter we will open the call for the Q&A session.

I would like to now hand over the call to Mr. Kushal Maheshwari to take the proceedings forward.

Thank you and over to you, Kushal.

Thank you, Siddharth. Good morning everyone and thank you for joining us for our Q1 FY27 earnings call.

The information, data, and outlook shared by the management during the call are forward-looking and subject to prevailing business conditions and government policies. All forward-looking statements are subject to economic growth or the risk faced by the company.

Please refer to slide number two of the investor presentation for the safe harbor clause. With that safe harbor clause, I will now hand over the call to our ED and Group CEO, Mr.

Lohit Bhatia, for his opening statements. Over to you, Lohit.

Thank you, Kushal. Good morning everyone and thank you for joining us for Quess Corp's Q1 FY27 earnings call.

We are pleased to start FY27 on a strong note with broad-based growth and improvements in the quality of our earnings. For the Q1 FY27, we delivered a consolidated revenue of ₹4,182 crore, reflecting a 15% year-on-year growth while a 7% quarter-on-quarter growth.

The EBITDA during this quarter came in at ₹85 crore. This is a 21% year-on-year growth with a margin at 2.02%.

PAT stood at ₹82 crore, growing at 61% year-on-year and 28% quarter-on-quarter, with an EPS of 5.5, also up 61% year-on-year. During the quarter, due to the implementation of the new labor code, resulted in a one-time revenue impact of ₹176 crore as well.

During this quarter, we received income tax refunds for the past financial years, including interest of ₹261 crore, which contributed to higher other income for the period. Importantly, we remain a zero-debt company as of June 2026 with a healthy net cash position, reflecting the continued strength and discipline of our balance sheet.

Separately, on the approval of the final dividend in the ensuing and upcoming AGM to be held on the 25th August 2026, we will be paying a final dividend for the last financial year of ₹3 per share, staying true to our commitment of rewarding our shareholders at every step of the way. Overall, the business performance has been broad-based growth across every segment, and I'll just briefly talk about that.

Q1 FY27 reflects continued momentum across our portfolio. With all three core segments delivering double-digit revenue growth on a year-on-year basis, we ended the quarter with a headcount of approximately 482,214 associates, which is up 4.5% year-on-year, reinforcing our position as India's largest domestic staffing platform.

In our General Staffing business, which has seen resilient growth despite the market environment, General Staffing continued to demonstrate scale leadership and execution-disciplined delivery. Revenue stood at ₹3,596 crore, which is up 15% year-on-year, 8% quarter-on-quarter.

The EBITDA for the quarter is at ₹51 crore, up 12% YoY, though sequentially down 2%. Headcount stood at 469,000, with an addition of 3,800-plus associates in a challenging market environment.

We, however, added 86 new contracts during this quarter as well in our General Staffing business. The DSO remains tight with 15 days AR while overall 28 days including the UBR.

The growth was led by our CRT, manufacturing, and allied verticals, while the BFSI saw a marginal decline. We continue to focus on higher value segments such as construction, manufacturing, and VAS, supported by the investment in technology and AI-led sourcing and productivity initiatives.

Moving on to our Professional Staffing vertical, sustained high quality growth. The Professional Staffing delivered another quarter of profitable GCC-led growth.

The revenue at ₹252 crore is up 3% year-on-year and up 9% quarter-on-quarter. The EBITDA during this quarter has come in at ₹28 crore, which is up 12% year-on-year with a margin of 11%.

GCCs now contribute 71% of headcount and 68% of revenue, reflecting our continued positioning in high value roles. Headcount at the quarter end stood at 7,129, up 7% year-on-year.

We added 36 new contracts in our Professional Staffing platform during the quarter, with an open mandate of 1,100 positions, primarily in niche and high value roles. Our gross margin to EBITDA conversion remained a healthy 50%, with double-digit EBITDA margins even after absorbing the annual merit cycles and the payouts which are typically for the end of the year, underscoring the structural strength of this business of ours.

Overseas business has been consistent with diversified growth. Our overseas business continued to deliver consistent double-digit growth across geographies.

Revenue stood at ₹333 crore, up 17% year-on-year, broadly flat quarter-on-quarter. EBITDA grew to ₹21 crore, up 17% year-on-year, with margins at 6.2%.

We added 37 new logos during this quarter, with double-digit growth in both revenue as well as EBITDA. The key highlights across some of our geographies: Singapore General Staffing business alone added 17 new contracts and 37 local nationals to their headcount.

Malaysia delivered 55% year-on-year revenue growth, scaling to 873 headcount with an EBITDA margin of 4.1%. Middle East delivered 12% EBITDA margin with 27% revenue growth and 18% EBITDA growth year-on-year.

Philippines recorded 17% year-on-year revenue growth with a 10% net margin. EBITDA margins remain stable despite the currency fluctuation, and our international portfolio continues to be well diversified across Southeast Asia, Singapore, Middle East, and rest of the world.

Digital platforms and Quess 2.0: building for a dollar-denominated and a higher-margin growth. Our digital platform businesses remain in the investment phase as we continue to build our blue-collar jobs market as well as AI-driven recruitment and workforce solutions.

We continue to make strong progress on Quess 2.0, repositioning our current volume engine towards a higher-margin, value-accretive growth in the years to come. We are building a partner-led, capital-light talent corridors across five focus segments: healthcare, technology, MEP and civil, hospitality and allied, and finance and professional.

Our Japan corridor is signed and in execution. Europe, particularly the Nordics, is in advanced stages of discussion.

Israel as well continues to be in discussion, and North America is at early stages of exploration. Over the next three to four years, we aspire to have 20% to 25% revenues coming from higher-margin businesses, changing the underlying composition of our company as well as the margin profile and trajectory.

People and ESG: I'm proud to share that Quess has been certified as a Great Place to Work for seventh consecutive year, ranking 19th among India's best workplaces in 2025. We were also certified Great Place to Work in Singapore for third consecutive year and for the first time in UAE.

During this quarter, we were also recognized as a CMMI Level 3 certified organization. We also were ranked 188th in Fortune 500 list and 175th in the ET 500 list, and certified as a Leadership Factory for India for the years 2026-2028.

Before I close, let me leave you with three thoughts as we look ahead into the rest of H1 of FY27. First, the festive season is coming up, and we are seeing demand firmer across our client base, which gives us confidence heading into the seasonally strongest quarter, both by sourcing and sales.

Second, we have laid a strong foundation to capture this growth across headcount and contracts, putting us in a good position to convert demand into revenue as it comes through. Third, taking these into consideration together, building on a healthy H1 performance along with our Professional Staffing and international business aiding in margin growth as well.

With that, I will now hand over to our Group CFO, Neeraj, to walk you through the financials in more detail.

Thank you, Lohit. Good morning everyone and thank you for joining us for Quess Corp Q1 FY27 earnings call.

I will begin with our headline financial performance for the quarter, followed by a brief segment-wise review. Starting with financial highlights for Q1 FY27, Q1 FY27 has been a quarter of broad-based revenue growth with profitability improvement and meaningful strengthening of the balance sheet, giving us a strong start to the financial year.

Growth was visible across all three of our core segments, and both PBT and PAT grew considerably faster than revenue, reflecting genuine operating leverage layered on top of a couple of one-off items that I will walk you through. Consolidated revenue for the quarter stood at ₹4,182 crore, up 15% year-on-year and 7% quarter-on-quarter, led by General Staffing, which grew 15% YoY and 8% quarter-on-quarter, with a meaningful contribution from a one-time revenue impact of ₹176 crore relating to the new labor code implementation.

Professional Staffing and overseas business grew a further 3% and 17% YoY respectively, and total headcount rose to approximately 482,214, which is up 4.5% year-on-year. EBITDA for the quarter came in at ₹85 crore, up 21% year-on-year, though down 2% quarter-on-quarter, with margin at 2.02%, an expansion of 11 basis points on a year-on-year basis.

While the sequential moderation of 20 basis points was largely a function of the annual merit cycle and variable pay reset that typically flow through in the first quarter, along with a 11 basis point contraction in margin in Q1 over Q4 FY26 due to the one-time pass-through revenue of ₹176 crore for the labor code. Other income for the quarter was higher at ₹26 crore compared to ₹6 crore in Q4 FY26, largely attributable to the income tax refund of ₹261 crore, which includes interest of ₹22 crore that was received during the quarter, the interest component of which flowed through other income.

This refund pertains to prior years and represents a meaningful one-time cash and balance sheet positive impact at Quess. As a result, PBT for the quarter grew to ₹86 crore, up 28% quarter-on-quarter and 64% year-on-year, and reported PAT stood at ₹82 crore, up 28% quarter-on-quarter and 61% year-on-year, with diluted EPS at 5.5, which is also up 61% year-on-year.

I'll move to the segment-wise financial performance now. General Staffing continues to be the scale engine of the business, providing stability, cash generation, and a broad operating base.

Revenue of ₹3,596 crore, which is up 15% YoY and 8% quarter-on-quarter, aided by one-time ₹176 crore labor code impact. EBITDA of ₹51 crore, which is up 12% YoY, although down 2% on a sequential basis on account of the annual merit cycle.

Net headcount addition of 3,800, with 86 new contracts added during the quarter. DSO remained tightly controlled with AR stable at 15 days, reflecting continued collections discipline in General Staffing.

GS has over 37,000 open mandates at quarter end, along with a strong sales pipeline as we move into Q2. Moving on to Professional Staffing, Professional Staffing remains our key structural driver of margin expansion, anchored in GCC and high-value technology roles.

Revenue of ₹252 crore, up 3% YoY and 9% quarter-on-quarter. EBITDA of ₹28 crore, up 12% YoY, with margins holding at approximately 11%.

The GCC engagements now account for 71% of headcount and 68% of revenue in this segment, with 36 new contracts added and open mandate pipeline of 1,100-plus roles. The sequential dip in EBITDA reflects the impact of the annual merit cycle and variable pay reset that typically lands in the first quarter, and which we have historically seen normalize as the year progresses.

Even so, our gross margin to EBITDA conversion in this business remained above 50%, and we sustained double-digit EBITDA margins. Our internal priority remains to scale Professional Staffing toward ₹30 crore quarterly EBITDA run rate.

I'll move to overseas business now. The business delivered another quarter of consistent double-digit growth, with stable margins supported by diversification across Singapore, Middle East, and rest of the world.

Revenues of ₹333 crore, up 17% YoY, with EBITDA of ₹21 crore, also up 17% YoY at a margin of approximately 6.2%. Segment EBITDA stood at ₹21 crore, up 17% year-on-year with margin at approximately 6.2%.

We also added 37 new logos during the quarter, with growth well diversified across Singapore, Middle East, and rest of the world. To summarize, Q1 FY27 reflects broad-based double-digit revenue growth across all three core segments, a sharp improvement in PAT and EPS, a strong zero-debt balance sheet, and disciplined capital allocation policy.

We remain confident that a resilient General Staffing base, a margin-accretive Professional Staffing and overseas portfolio, and continued balance sheet disciplined position us well to deliver sustainable, high-quality earnings growth throughout FY27. With that, I'll hand it back to the moderator for Q&A.

Sir. Thanks for the opportunity.

Sir, my first question is on the General Staffing segment. Obviously, we are seeing some strong growth there, which is largely driven by the consumer and the manufacturing verticals.

BFSI has been a laggard, and I know there are industry changes that are happening in the BFSI vertical. If you can just give some color in terms of how to see the BFSI in terms of revival.

Also in terms of manufacturing, which is largely a more unorganized sector, and we are seeing some good traction there. What are the challenges that we're seeing in terms of manufacturing?

Also the markups there in the manufacturing are higher versus BFSI. Is it that as we scale manufacturing, we can see higher margins in the General Staffing business?

That is one part. Also in terms of overall portfolio mix, what part of the overall portfolio would be fixed markup versus variable markup?

In terms of newer engagements, are we seeing a shift towards more variable markup models? Thank you.

Thank you, Amit, for your question. I would ask Lohit to give in his views, followed by Nitin.

Hi, good morning, Amit. Thanks for the question.

If you really look at it, you're right, the growth in this quarter in General Staffing has come primarily from manufacturing as well as the repeat of CRT, or consumer, retail, and telecommunications, for us. The consumer space has been a little lagging in the last few quarters, but last year was a very busy policy year.

We are starting to see definitely growth coming back in that. Together, these two have not just given us growth, but they are definitely giving us a better growth for the rest of the year, because 86 new logos and contracts have been signed by us, and we feel that as these fructify and mature in second quarter, there would be additional headcount which will also come from each of these customers that have already been added.

To your point on BFSI, I'd like to divide it into two: the core banking sector and the rest of the NBFC and other fin techs and other allocations. As there is a strong regulatory headwind in our industry, what can and cannot be outsourced.

As an organization, for the last couple of quarters, we have been dabbling with that, but focused on what can be outsourced. Opportunity-wise, opportunity in India with housing finance companies, NBFCs, and other fintech companies continues to remain large, though the scale of each of this may be in a few hundreds.

While our team signs more and more relationships and will build on those relationships, obviously it will take some time for it to come back to deliver on that. Let me just bring notice to two facts.

First, Quess is no longer a volume organization, and I think consistently for five quarters in a row, we've shown that we are a volume and a value company. Today, only 50% of our profit pool comes from the General Staffing business, while 50% comes from Professional and international, which are the higher margins.

Within each of our platforms, including in General Staffing, we have a very focused activity, execution, and narrative towards the higher-margin businesses. These are the value-added services, the manufacturing portfolio, as well as the construction portfolio.

You did ask a question that does manufacturing give higher PAPM? Yes, they do.

If the normal trend of General Staffing PAPM is between the 600 to 700 at a broad level, in the manufacturing space the same could be anywhere between 800 to 1,100. From a gross margin perspective, in consumer it could be 2% to 3% gross margin, whereas in manufacturing it could be 5% or 6% gross margin.

It is not easy to deliver on manufacturing because it requires intensity in sourcing, which is something that Quess has built in the last 18-19 years. It requires infrastructure, which Quess has built in the last 18 years plus with 65 offices of our own.

It requires technology intervention and recruitment and sourcing, which again something that Quess has built and is continuing to build this year as well. I believe on fixed and variable, within the General Staffing space, fixed and variable, I'll just come back and 70-30.

So 70% of the contracts will be fixed, about 30% of the contracts will be variable. In this quarter, around 38% of the contracts have come with variable, but these are obviously new contracts for them to become large and then benefit from the variablization will take some time.

Okay. Thanks for the elaborate answer.

Obviously the focus is shifting towards higher-margin segments and the mix is becoming healthy for us. In terms of the Professional Staffing segment, obviously there has been a growth coming in there.

Because we are becoming more GCC heavy there, are we seeing some signs of normalization in terms of GCC hiring? Can there be a shift between, say, some slowdown in GCC versus some pickup in the IT services traditional hiring there in the IT staffing?

Also in terms of margins, you've mentioned about you want to be in the range of ₹30 crore quarterly EBITDA kind of a range, so that is roughly 12% kind of a number, 11.5% to 12%. Is it the kind of EBITDAs for the IT staffing that we can see for the coming quarters?

A connected question on the EBITDA part for General Staffing, obviously in this quarter there has been an impact because of the ₹176 crore number. Ex of that, 1.5% is the EBITDA margin for General Staffing.

That is the steady state margin that we can assume, or there are some investments that are required for the volume growth to sustain?

Thank you. Lots of questions in that, actually.

First we'll pick up quickly on the GCC heavy story. From our book point of view, 68% comes from GCC in terms of revenue and about 72% comes in terms of headcount.

However, our team is extremely bullish on further growth in GCC for a couple of reasons. India has about 2,407 GCCs as we speak.

As of date, we have been able to capture only 10% of them. There is a big blue ocean out there for us to be able to capture.

We have added geographical intensity, we've added practice-based intensity, and that will continue to yield more business to us. India itself as a nation is attracting anywhere between 250 to 300 GCCs every year.

Yes, some GCCs may mature, and once they mature, they could be a hiring slowdown in that particular GCC. However, we are confident that with so many GCCs out there yet to be captured by Quess, the new GCCs which are coming, and our international corridors, one of which has already gone live, which is the Japanese corridor, we will definitely be able to capture a greater part of the market.

I'll stay with Professional Staffing and answer the margin profile bit and then move to GS. As far as our margin profile in Professional Staffing is concerned, you will see that last financial year we started the quarter at about 10%, and we gradually towards the end of the year exited over 12%.

Yet we had guided for an 11% to 12% margin profile in this portfolio. I will continue to keep guiding for 11% to 12% in this portfolio as well, while every effort will be made by our leadership team in the Professional Staffing stable to do better than that.

As far as our General Staffing EBITDA is concerned, yes, you're absolutely right. ₹176 crore of a one-time pass-through entry that Neeraj explained on account of labor code is there, which is not yielded bottom line, and hence the correction of 10 basis points.

The second correction during this part of the quarter, Quess religiously does the merit cycle on the 1st of April of every new financial year, and that also been baked in into these results itself. If you normalize for this, we would have been a little over 1.5%.

There are multiple moving parts in General Staffing. While on one side the flat fee business can erode margin on a percentage basis, everything that our team is doing from AI investments, sourcing and platform investments, and the output of that should start yielding from this financial year, along with our higher margin portfolio within General Staffing itself, we should be confidently producing similar or better results.

Sir. Thank you and all the best.

Sir, congratulations to you and the team for such a healthy number. Sir, you've given a very strong statement that Quess aspires to be a 1 million organization by 2030, which will get it amongst the world's largest private employers.

What direction would you set for this, sir, in terms of geography, in terms of industrial versus GCC versus General Staffing? I would want a broad guidance on this trajectory, sir.

Sure. Thank you.

As you remember that when we were demerging about a year ago, for all the three organizations, we had given stated goals. For Quess, the stated goal was to become world's number one from the then rank of fourth and fifth, and today we rank the third and the fourth as far as volume is concerned.

For us to become the world number one, technically we need only 125,000 more headcount, and at a point somewhere between 6 and 6.3 lakh workforce, all of us as proud Indians will see an organization which is the world's largest come out of India as far as workforce is concerned. Our North Star continues to be 1 million that we would eventually want to see, and this is based on the fact that India has demographic dividend, which is going to be positive for our country at least for next 18 years.

In this is baked in the fact that India has a demographic dividend. To your question, does this require us to do disproportionate amount of investment and operations in other countries?

I would slightly differ from that. In the five corridors, and I would draw everybody's attention to the last three slides on future strategy in our investor deck this time.

In the future of Quess, it is a capex-light and a partner-led model in five territories and geographies that we have called out, that is Far East in Japan, Israel and UK, Germany, Nordics, Canada and US. The intention is not to have an operating staffing company in these countries because each of these countries have turned demographic negative more than 15 or 20 or 25 years ago.

Supply side constraints are shrinking those countries. What we intend is from these countries, there is disproportionate amount of business coming to India on both talent and technology.

That is what is converting into the GCC strength of India. We want to build on that strength through our partners.

The second thing we want to do is we want to build a reverse skilled talent mobility for the international markets into these countries. Again, in my speech also, we had alluded to the four tracks which we're looking at, which is healthcare, MEP, technology, retail, and hospitality.

It is a very capex-light and it is not about starting new staffing company in these countries, but it's using India's global power of technology and talent for fulfilling that journey.

In the past two years, the geographical disturbances which have happened, and see most of the growth countries we are aspiring to be also have other issues. I would say visa type of issues.

Do you think you'll be able to successfully surmount these and things will come back to normal in a couple of years?

I'm sorry, that question was not clear. Could you just please repeat?

Our overseas growth, do you think it will face visa kind of issues, sir?

Visa issues. Got it.

Thank you. If you overall look at Quess portfolio in the 19th year, about 7% of our revenue comes dollar-denominated from countries outside of India; 93% comes in Indian rupees.

We are obviously looking at higher-margin, higher-accretive business, and also dollar-denominated business or multi-currency denominated businesses, which is what it will give us. I would also like to draw your attention to the fact that the Indian government is relentlessly working to do FTAs with multiple nations, some of which have already been announced.

Europe has been announced and should fructify in the calendar of 2027. USA, hopefully the FTA should happen soon.

In each of these FTAs, if you notice, there is one full chapter on embedded skilled mobility that Government of India is signing with all of these countries. Indian nationals have always done extremely well when it comes to Middle East for blue and gray collar and when it comes to the North American market for the technology talent.

We see no reason why those markets should not open up in a bigger way to solve their own internal crisis in healthcare, in technology, in mechanical, electrical, and plumbing. As Quess, we want to be a management which is looking world over at opportunities that can exist.

We will be ready with those opportunities as and when the corridors open up. To your point, the day the visas are ready, Quess should be there.

Thank you, sir. Best wishes to the team.

Thank you.

Thanks for the opportunity and congrats for strong execution. First question is on the GS associate headcount growth.

In Q1, it grew roughly around 5, 5.5%. How one should look, let's say, associate growth in General Staffing business, considering some of the challenges which you highlighted in BFSI while you see good growth opportunities in some of the other verticals?

Second question related to your ambition about, let's say, from half a million associate to a million kind of associate in by '30, maybe roughly 5 years kind of time period. What will be the role of M&A in, let's say, achieving that ambition?

If, let's say, M&A is one of the key element in overall strategy, can you give broad thought process around it? Third question is on the new labor code.

We have seen some impact, roughly around ₹175-odd crore impact which we have seen. Do you expect it to continue at least from base quarter perspective in this year when one look YoY perspective?

If yes, whether this 10 bps is likely to be a headwind when you look full year margin in the business? If you can answer three, then I have one or two follow-up.

Thanks.

Dipesh, thank you. As far as our General Staffing associate headcount is concerned, in the last couple of calls as well, we had said that as an organization, while the investments, the technology, the geographical presence that we've created for ourselves can definitely do a lot more, but we are looking at each year to perform at between 10% to 11% of headcount growth, which yields anywhere between 40 to 50,000 headcount.

In the first quarter, we've done about 5,000 of that, but my leaders and the entire team in General Staffing is geared up for the upcoming season. If you want, we can talk a little more detailed about that and Nitin can throw some light.

As far as our ambition on the global scale is concerned, that's what I was answering in the previous question as well. This was a stated goal that we had, and we continue to keep it as our North Star.

However, what we are more bullish about is the margin-accretive business and taking Quess towards both a volume and a value growth trajectory. It is not an either-or for Quess anymore.

It has not been for the last couple of quarters. For the next few years, the focus will be more on value-accretive businesses besides what we do on volume.

As far as your question on M&A is concerned, no, nothing at the moment is there. Like I mentioned, these are capital-light conversations in corridors.

We are looking at a partnership mechanism, one of which was announced in the month of June and has gone live, which is with the Japanese corridor with our partners. We will continue to look at it in that way.

Whenever and if any opportunity comes which is value-accretive to Quess at the right valuation, I am sure we'll keep all our investors and the community informed about the same. I will hand over to Neeraj on the specific question on the new labor code and what could be the further aid during the financial year, if any.

Thank you, Lohit. To answer the question on labor code, till Q1, YTD Q1, I think we have covered almost 68% of our customers.

From an impact perspective, it actually doesn't impact our profitability in the income statement, it is as soon as our customers make a choice between FTE and permanent model, they confirm to us and basis that we book the liability. It is just a pass-through for us.

As I said, till Q1, we have already covered almost 68% of our gamut. We believe, and we are actively in touch with all our customers, we believe by end of Q2 and maybe early Q3, we should be able to cover the entire set of customers for Quess and from a liability perspective we'll be able to fully book.

I would pass on to Nitin if he has some color to add to the General Staffing business.

I just wanted to speak about General Staffing and where we are at this point of time and the base at which we are sitting. As Lohit has mentioned, I would say there are three factors which can impact the volumes in quarter two, and because you are asking for an outlook.

Factor number one is that we have signed 86 new accounts, and all these accounts are expected to grow in Q2 and build volumes. The second important factor is that the festive season is coming, and we expect a good festive season.

At this point of time, we are sitting on an open sourcing book of 37,000 people. On top of that, there are new pipelines that we are building, and those pipelines are healthy as well.

Based on these three factors, we are expecting a strong Q2 in our business.

Understood. Just on couple of follow-up.

First on the numbers side, you said 68% of the customer covered by Q1. Let's say 68% covered.

Do you expect let's say this ₹176-odd crore, is it a recurring number at least from YoY perspective? I understand QoQ may not recur, but ₹176 crore for this 68 percentage customer will recur in quarter two, quarter three, quarter four, or no?

See, the number exactly depends on the choice that the customer makes, because the liability will depend on whether the customer goes for the FTE model or the permanent model. As I said, we will get the confirmations by the end of Q2 and the exact numbers will be known at that time.

It will then go through a actuarial valuation process and we'll book the liability. My estimate is that the final number, the remaining number, should be lesser than the ₹170 crore that we have booked in Q1.

No, my question is about the YoY. Let's say this quarter we book 170.

Because it is related to gratuity and some of the other benefit, right? Now, because it is labor code lead to increase in that number, that should be recurring number, right?

Or it is one-time revenue? I'm not very clear on that part.

The ₹176 crore was a one-time impact because you're booking the liability YTD. Basis that headcount base, you will then book the normal gratuity liability number as your number moves, and that will depend on the attrition and the new hiring that you will do.

What would be that normal number? What would be the benefit from this normal number?

Let's say because of gratuity and other impact, what is the extra benefit we enjoy this year?

See, we don't enjoy any benefit. As I said, it is always a pass-through for us.

Whatever the recurring liability will come for the associate headcount, we will book that as a cost and we'll correspondingly book that as a UBR. From a Quess perspective, we don't enjoy any benefit of this.

No,

EBITDA-wise I understand, we don't get any EBITDA, but there might be some revenue benefit. I am looking for revenue part.

As I said, in the next quarter, the overall final liability should be 1/3 of what we have booked in Q1. From thereon, the normal number will be very small.

I don't think it is going to bump up our revenue significantly.

Understood. The second question I have on the Japanese corridor, which let's say you indicated, can you give some context and some mechanism, let's say how it works?

Because I'm not very much familiar. If you can help us understand that part.

Last question is on the sourcing strength. I think we always claim we have very good sourcing strength.

Can you give let's say what percentage of gross hiring came directly this quarter? Thanks.

I'll ask Lohit to answer the question. Japanese corridor is one of those mature economies where the demographic dividend has turned negative about 20-25 years ago.

While initially it is impacting their healthcare and aged care services, the downstream impact is now also visible to technology. If you look at the entire landscape of India's GCCs at 2,407, just roughly about 5% have come from the Japanese ecosystem.

We feel that many of these countries can definitely impact GCC advent into India in a significant way in coming years. Quess is not a known name in Japan.

However, Japan is looking at India in a very significant way. With our partnerships everywhere, it is to use strong local relationships and strong local names, which can introduce Quess at an early stage to our customers, and we can fulfill both their talent, technology, as well as infrastructure needs as and when they arrive into India.

That's as far as what we've done in Japan. Our sourcing strength has been built in the last 18-19 years.

First differentiation for us is that we, from an infrastructure standpoint, we stand at about 65 offices. From a deployment point of view, we have people deployed at 6,464 different pin codes in the country.

Today, 41% of our associates are deployed in tier 3 and below. There is a very, very wide coverage that Quess has.

Every second employee in Quess in the core employment is a recruiter. We have 1,400 recruiters, of which around 750 primarily work only in the General Staffing space.

Just in the month of June alone, we touched 18,000 numbers which hit payroll from sourcing alone. For the quarter, we did close to about 46,000 additions from the sourcing to the gross adds.

If you like-for-like compare this for a year ago first quarter, it was roughly the number was 29 to 30,000. There is a definite addition as far as sourcing strength is concerned.

Sourcing adds one more key differentiation, and that differentiation itself is that we are able to source at scale for customers. That differentiation puts us ahead on the table when it comes to clients, especially when you tackle tougher mandates like manufacturing, construction, and so many others.

Understood. Thank you very much.

Good morning, sir. Thanks for the opportunity.

I have a couple of questions. Firstly, on the new Quess 2.0 model where we have more opportunity in other geographies like Japan, Europe, and Israel.

Can you quantify the opportunity in terms of numbers, and it can provide a sense of how an organized, large player like us can benefit over a smaller player? How do you look the overseas staffing business vertical in next 3 to 5 years?

Adding on to that, do we see any increase in EBITDA margin in our overseas business over the couple of years?

Sorry, what was the last question?

Improvement in EBITDA.

Sure. Thanks.

As far as Quess 2.0 is concerned, the first thing that we definitely explained is that these are mature markets. When you sum total the amount of HR services in these markets, worldwide HR services is about $700 billion.

Of that, the Indian market, for which we are the largest operator, is roughly $19 to $20 billion. Give or take, on a value scale, Quess is already at 9% to 10% of the entire Indian market.

However, when you see it from a worldwide perspective of the balance $680 billion, we don't even have 1% of the market share there. Within that $680 billion, US, Canada, Nordics, UK, as well as Japan put together create about 60% to 65% of that $680 billion of HR services market.

Like I was mentioning in the earlier part of the call today, that it is the supply side shortages in those countries and not the demand issues which are creating the shrinkage, and hence that supply has to be drifted to another country. The same ways that IT services 30 years ago were able to scale and perform, it is our belief at Quess that it is staffing companies like Quess that will be able to solve the technology and the talent requirements for the world as such.

Again, I repeat myself, we're not opening offices or staffing companies in those markets. We're creating capital-light partnership models, which is to introduce companies from those into the corridors and perform for them in India and reverse migrate skilled workers.

To your question on what could be the market potential, see, we've just started this journey in the last 90 days. If you see from the color that I have given you, $20 billion of the Indian market where we are number one versus $680 billion of the market which we've not yet touched, at this moment, I'll leave it at that.

As far as organized players to smaller or inorganic players, this is more in Asia phenomena, or particularly an India phenomena. Rest of the world has mature players in mature markets, and they are fewer players who conquer a larger part of the market.

We'll have to play it as it comes. Again, I would like to tell everybody that as Quess management, we have deep investments in skill and talent and people for each of these business lines that we're talking about.

We've been making significant investments in the last five, six months to get to this stage and this point. As far as our overseas EBITDA is concerned, currently we hover at about 6.2%, 6.5% EBITDA margin in overseas.

Two of our markets are already in double digits. The rest of them are sub-5% and overall that gives us the 6.2% to 6.5%.

We would definitely want more, but this is a very healthy margin, I would continue to keep guiding for a 6.5% to 7% as things mature.

Got it, sir. Secondly, over a longer term, because of labor call labor laws and other complaints going on in India, are we seeing any structural shift from our clients, let's say earlier they used to prefer a wide number of staffing vendors to provide the workforce and to manage the workforce?

Because of labor laws and other complaints related things, at least in General Staffing, do we see inclined conversations where they want to shrink the number of staffing vendors that they work for?

In the last couple of years, every time a significant policy movement has taken place in the country, within a period of 6 months to 18 months downstream benefit has always come to a large operator, number one operator like Quess. If you go back into GST and post-GST then the COVID transition, as we came and emerged out of COVID transition, March of 2021, our headcount was just a shade over 240,000.

Today, almost 5 years and 1 quarter later, we are sitting at double of that number at 482,000. Yes, you're absolutely right.

Whenever the market throws a challenge in terms of compliance, governance, treasury operations, complexity of hiring or sourcing or skill talent, it does disproportionately help the largest operator in some ways. How much of that will bake into this financial year or the immediate next financial year, I wouldn't want to take a guess there, but all I would want to say is that as a management team and leadership of Quess, we are very, very focused to keep looking at every such emerging opportunity.

With both our people, scale, and technology, if and when that starts to happen, we will be there.

Got it, sir. Thank you.

Hello, thank you for the opportunity. Sir, on the Quess 2.0 pivot that you've highlighted in your presentation, I just wanted to understand the economic better.

Would the reverse migration have similar margins to the current overseas staffing business that we do? The inbound GCC business be similar to the Professional Staffing business that we have?

That was first question. The second one was that you plan to expand this business to about 20% to 25%, like you plan to have dollar-linked revenue of 20% to 25%.

What is the current base of dollar-linked revenue that we have?

The current base of overseas earnings for us is about 7% and 93% is in INR-denominated terms. This is this is the exact number.

As far as your question on GCC versus PS is concerned, and I'll have Kapil also comment. GCC is coming to India because they're looking at very specific niche talent, and this niche talent is not available in the 0 to 3 years or 0 to 5 years of entry level experiences, and hence the kind of talent that we are providing to GCCs is mostly in the 5 to 13-year experience category.

As the talent matures in experience and niche skills, the price points for them continue to go upwards. To give a very ballpark figure, a revenue line for a GCC kind of a business would be in the range of ₹1.5 to ₹2.5 lakh revenue per associate per month, with a decent margin profile for them.

What we earn from a GCC revenue in India on a revenue or a margin profile, almost somewhere matches with technology talent that we deploy in Southeast Asia in terms of revenue and PAPM as well. However, I would also like to put another perspective here.

When we say there could be reverse migration and more GCCs coming to India, it's not at the behest of Quess losing any international business because Quess internationally is only 7,000 headcount. We are so microscopically small there that it's not Quess people coming back to India.

It's global demand coming to India because technology and talent which needs to solve at scale is not available in most of these mature markets, which is why more and more GCCs are coming to India and will continue to keep coming to India.

Got it. Given that this Quess 2.0 pivot that we are doing is through a partnership model, just want to understand the economics and the margins.

Would they be similar to the to the business that we do currently?

I would not like to hazard early guesses before MSAs are signed, execution has begun, and delivery has begun. Let's just start clocking a few million dollars of sales for us to give you a real, true margin perspective.

What I can tell you is that there is a very deep amount of work which has already been done in this in all the corridors that we spoke about. Why did we choose these corridors?

Why did we choose those specific specializations, and where will the talent come from? Deep amount of work has already been done in the last few months as far as that part is concerned.

The second thing I'd definitely want to mention is that the margin trajectory will be of more the international corridor and the professional corridor and much lesser than our General Staffing platform margin. If that gives you a perspective of where this can go.

18 months ago, our profit pool from GS used to be of the order of 65% to 68%, while the other two were at 30%, 35%. Today we are at 50-50.

By doing this, if we can increase that mix the other way around to 35 coming from the GS businesses on a growing base and 65 from the higher margin businesses, that is where we would want to be three to four years from today.

Got it, got sir. That is helpful.

Just one final question. Who would our partners typically be here?

Are these are these like government bodies or something, or private entities?

One of our partner is already put out there in the public domain. They're a listed company from Japan itself and a very reputed firm in the HR technology space.

They're not in the staffing business. The other four partners I would not like to reveal before those MOUs and MSAs are fructified.

Got it. Thank you.

Thank you so much.

Thanks. It has been two quarters since we've seen the ELI scheme come in.

Can you throw some light on the benefit we expected from that, how is the penetration?

Sorry, come again?

The ELI scheme. Can you throw some light on that, sir?

Not yet, because we have not yet considered any of ELI benefit in our results up until now. As and when it happens, we will definitely disclose.

We haven't received any subsidies from the government?

Not yet.

Under the scheme? Okay.

Not yet.

Thank you.

Thank you.

Thank you. Just to summarize our Q1 FY27, this is a broad-based, double-digit revenue growth across all our core segments; a strong margin and profitability with PAT and EPS growth at 61% year-on-year; the continued progress of our Quess 2.0 strategy to build the higher-margin, dollar-linked revenue will be our area of focus besides building on the volume that we already sit upon.

As we move through FY27, our focus will continue to be on driving volume within our General Staffing portfolio and reaching a net addition of 30,000-plus; sustaining growth momentum in Professional Staffing and overseas business; driving margin expansion across segments; scaling our dollar-linked talent corridors under the Quess 2.0; continued disciplined capital allocation and balance sheet strength. We remain confident in our ability to deliver sustainable, profitable growth with improving return ratios while building the next phase of Quess as a leaner, more productive, increasingly higher-margin organization.

Thank you again for joining us today for the earnings call. Your questions, feedback have always been valuable, and we appreciate your continued interest and support.

Thank you.