Margins from GCC recruits triple of IT staffing, says Quess Corp CEO

Guruprasad Srinivasan, CEO, Quess Corp

Margins from recruits in Global Capability Centres (GCCs) are three times higher than those in information technology (IT) staffing, according to Quess Corp. The staffing firm reported a 16 percent on-year increase in the share of GCC headcount for the quarter ended September 30, 2024.

“In GCC hirings, we will make at least three times of what we do in IT, three times of that percentage margin or actual absolute,” Guruprasad Srinivasan, Group Chief Executive Officer of Quess Corp, told Moneycontrol.

This growth in GCC margins comes at a time when the sector has been expanding rapidly, prompting concerns that the rise of GCCs could cut into IT companies’ revenue.

Quess has tapped into this shift, building a robust client base of over 200 GCC clients, the company had said earlier. Out of these, around 140 are longstanding clients with whom the company has established relationships, while the rest were new contracts signed between Q4FY24 and Q2FY25.

Also read: See green shoots in IT hiring, GCCs make up 70% of mandate: Quess Corp

Quess Corp has dedicated acquisition and account management teams to sustain and grow its client relationships with GCCs. “For us, GCC is more of a realisation game than a headcount game,” Srinivasan said.

The rapid growth of its GCC clientele is reflected in the books as well. In the July-September period, the revenue contribution from GCCs increased by almost 5 percent to 68 percent YoY. Sequentially, the metric increased by over 15 percent.

The threefold margin Srinivasan referred to was also reflected in the cash operating margin, or, in other words, the earnings before interest, tax, depreciation, and amortisation (EBITDA). This metric increased 5 percent to Rs 92 crore in the Workforce Management business division of Quess, which houses IT staffing.

While the terminology may be confusing, all the developments point towards the rise and rise of GCC manpower and the decline in IT services. This could be understood from the fact that almost 70 percent of the Workforce Management division comprises GCC staff.

IT’s Rs 35,000/month vs GCC's Rs 10 lakh/month

Srinivasan further explained that Quess has focused on profit margins rather than headcount in recent years, streamlining its workforce to about 5,500-6,000 from 9,000, while doubling profits.

He said the monthly wages for GCC roles far outpace those in IT staffing. According to Quess, the average salary for GCC recruits ranges from Rs 75,000 to Rs 1 lakh per associate per month, nearly double that of typical IT staffing wages, which sit between Rs 30,000 and Rs 35,000.

Moreover, niche roles within GCCs command salaries of up to Rs 8-10 lakh per month, reflecting the demand for specialised skill sets. This demand also poses recruiting challenges, as finding and negotiating talent with five to eight years of experience for these high-wage positions is a different ball game.

“GCC pricing is definitely better than IT services, because of two aspects. One is, we do not do entry-level positions. Number two, since we do niche skills, there will be few skills that will be as high as Rs 8-10 lakh, roughly about Rs 7 to 10 lakh per month kind of top-line wage,” Srinivasan explained.

He believes that growth should, more or less, return in the IT sector by first quarter of the next financial year (Q1FY26).

Also read: Top 4 IT firms add 8,400 employees in Q2FY25, ending four quarters of decline