Staffing firm TeamLease Services’s fourth quarter revenue run rate was largely driven by hiring by Global Capability Centres (GCCs) at a time when the information technology (IT) sector is slowing recruitments.
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GCC hiring helps maintain revenue run rate as IT firms go slow, says TeamLease CFO
Staffing firm TeamLease Services’s fourth quarter revenue run rate was largely driven by hiring by Global Capability Centres (GCCs) at a time when the information technology (IT) sector is slowing recruitments.
“Over the last few quarters, we are able to maintain the run rate mainly because GCC contribution coming into some extent compensating the loss that's happening on IT services,” TeamLease Services Chief Financial Officer Ramani Dathi told Moneycontrol in an interview.
The trend is significant because hiring at IT companies is at a multi-decadal low and the attention has now shifted to GCCs, which are hiring software professionals more than ever.
GCCs are offshore units set up by companies to deliver a range of services to their parent entities by making use of global talent, resources, and expertise.
“Even though margins have depleted in specialised staffing over the last few quarters, we are able to maintain the run rate mainly because GCC contribution to some extent (is) compensating the loss that's happening on IT services,” Dathi said.
The gap though has not been filled in terms of volume, as GCCs hire only a fourth of what IT firms used to.
The cash operating margin for the specialised IT staffing vertical stood at 6.5 percent for the quarter that ended March 31, compared to 7 percent in the year-ago period.
The firm’s total revenue in the March quarter was up by 23 percent year-on-year at Rs 2,224 crore.
As hiring in the GCC sector is a recent phenomenon, TeamLease, like several such firms, doesn’t give a separate break-up of the segment’s performance.
Last week, rival Quess Corp, too, told Moneycontrol that most of its current hiring mandates originated from GCCs while demand from the IT players remained subdued.
Dathi said a growing number of GCCs in India were expanding their operations beyond IT back-offices to include human resources, legal and other functions. This expansion presents a significant opportunity for the Bengaluru-based company, which aims to create a new sub-vertical.
Despite some positives, the CFO acknowledged ongoing challenges in the IT services sector. “We are seeing some green shoots, but in terms of timing… because we've been hearing these green shoots for last one-two quarters. But on the ground, it's still not happening,” she said.
Skill set dynamic
Discussing hiring trends, Dathi said traditional coding and engineering profiles such as Java developers continue to dominate, constituting 60-70 percent of new hires even for GCCs.
There is, however, a growing demand for niche skills in artificial intelligence (AI) and machine learning (ML).
“But in terms of volume, they won't be more than 20-25 percent… But in the new-age niche skill set, the availability or the mismatch in skill gap is still large,” she said.
Many candidates claim to have AI/ML skills based on short courses but these often do not meet client expectations, she said.
TeamLease has a strong database for traditional skills and faces no challenges in filling those positions but there is a significant mismatch in the availability and quality of talent with niche skills, she added.
The firm remains optimistic about the contribution of GCCs to its revenue stream. As the number of GCCs and their employee bases grows, the company expects improved margins and new opportunities in specialised staffing.
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