TEAMLEASE Q3 FY26 earnings call.

Guidance to track

• Management expressed confidence in bridging the headcount gap lost during Q3 through new client acquisitions and incremental demand from existing clients, with recovery expected to materialize between Q4 FY26 and Q1 FY27.
• Digitization initiatives and operational leverage initiatives have been consistently contributing to margin improvement and management expects this trend to continue playing out through the remainder of FY26.
• Despite continued investments in sales and product within HR Tech segment, management expects overall net improvement in EBITDA, though it will remain in low single digits on full-year basis.
• General staffing has 16,000+ open positions with healthy sales pipeline. GCC segment maintains over 500 open positions at any given time, supporting expansion within existing and new GCC customers.

Risks flagged

• RBI directive to NBFC resulted in ~28,000 headcount insourcing (20,000+ in General Staffing, 5,600+ in DA). This is the second such instance in recent quarters (previous in Q4 FY25). While no additional regulatory action is currently visible, the sector remains in transition.
• Analyst raised concern about IT companies not increasing payroll amid AI disruption. Management acknowledged conventional tech hiring (Java, .NET, manual testing, people managers) has substantially declined, though niche skills in AI, data, cloud, and cybersecurity are growing. IT contributes 6% to revenue but 30% to bottom line.
• Analyst compared Teamlease margins (~2%) to peers like Quess (~3.5-4%) and RV Encon (~3.5%). Management attributed the gap to lower international/IT staffing exposure and indicated margin recovery requires sustained growth in specialized staffing and DA businesses, which have been stagnant.
• Bulk of EBITDA in HR Services historically concentrated in Q4 due to university admission cycles. While Q4 will remain the highest margin quarter, management noted they are working to spread recognition across quarters, though fundamental seasonality remains.

Key quotes

• We've taken the full impact in Q3, so we don't expect any more number loss on account of that. Given the outlook on the demand side with other clients and delivery moving forward, we expect positive growth in Q4 on the headcount side.
• The element of formalization that could kick in from labor code implementation—I think the consolidation of labor laws and rollout is in the broad trajectory of the right thing to do, but I don't think in the immediate cycle it will have an impact on driving up the demand or the numbers substantially.
• We have a lot of work to do on GCC expansion and expand our presence across many more GCCs in the five or six segments that I called out. The bot model that we operate with in GCCs helps us give better margins, and wherever possible we will ensure that we have better growth on both revenue as well as margins through that model.