Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
TeamLease Services Ltd (NSE: TEAMLEASE) Q4 2026 Earnings Call dated May. 20, 2026
Corporate Participants:
Ashok Reddy — Executive Vice Chairman
Suparna Mitra — Managing Director and Chief Executive Officer
Bala Subramaniam — Senior Vice President Enterprise
Niti Sharma — Chief Executive Officer Specialized Staffing
Analysts:
Arjun Sabla — Analyst
Unidentified Participant
Amit Chandra — Analyst
Dipesh Mehta — Analyst
Presentation:
Operator
Good day and welcome to The Team Lease Q4FY26 earnings conference call hosted by HDFC Securities. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an updater by pressing Star then zero on a Touchstone form. Please note that this conference has been recorded. I now hand the conference over to Mr. Arkham Sabla from HDFC Securities.
Thanks. And over to you sir.
Arjun Sabla — Analyst
Thank you. Good evening everyone. On behalf of HDFC securities we welcome you all to the Team Leads Quarter 4 FY26 Earnings Call. Today we have with us the management team of Team Leads represented by Ms. Suparna Mitra, Managing Director and CEO Mr. Ashok Reddy, Executive Vice Chairman Ms. Ramani Rathi, CFO and CEO Ms. Niti Sharma, CEO Specialized Staffing Mr. Bala Subramaniam, a Senior VP Enterprise. I will now hand over the call to Ms. Suparna Mitra for opening remarks post which we can open the floor for the Q and A session.
Thank you. And over to you Suparna.
Ashok Reddy — Executive Vice Chairman
Hi Arjun, this is Ashok. I’ll just start it and hand over to Supanna. Just wanted to apologize for for the delayed upload of the results to BSE and NSE and hence the delay in the call. There were some deliberations that were happening on the buyback and that got closed and the results and the board outcome has been uploaded now. So just wanted to apologize for the delay in the scheduled call and appreciate all the joinees who have stayed and are participating in the call. Now we have had Suparna join us to take over the MD and CEO role and the transition has been going well and from this quarter onwards she will lead the dialogue on the results front.
Over to you Suparna.
Suparna Mitra — Managing Director and Chief Executive Officer
Thank you Ashok. Good evening everyone. Thank you for joining us. It’s an absolute pleasure, an honor for me to be. This is my first amin call to be on this call. I want to first begin by acknowledging and thanking what Ashok and Manish have built and team lease over the last 25 years. This is a company that has very important tagline Putting India to work. It’s a business that has put over 24 lakh Indians to work and created at the same time one of India’s most respected people solutions companies.
The company Has a very strong financial record, great balance sheet, a lot of free cash, virtually no debt and also a very strong brand and operations backbone. And I’m very grateful for this legacy that I’ve inherited and I’m very excited and committed to building on top of this foundation. Now over to this particular quarter, Q4 was a quarter that actually demonstrated and tested our operating discipline. Revenue came in softer because of the full impact of insourcing by one of our big nbsp clients.
We had already flat the source into quarter three and as a result the overall headcount growth was muted. Having said that, the operational discipline and machinery actually came in handy and we had a good profit story for the quarter. EBITDA grew 8% sequentially and PVT grew 30% year on year. Profit after tax grew 22% also the last quarter of the year and I’m happy to announce that for the full year EBITDA grew 14%, PVT grew 36% and we delivered 83 rupees in EPS, 28% higher than last year. As I kind of reflect on the quarter and also building on what I’m focusing on in the next few quarters, these are some highlights and some focus areas I think new logo addition in general staffing and continuing continuing the momentum on operating leverage is a clear call out.
Accelerating the scale of higher margin businesses, especially team lead, digital and degree apprenticeship business is a priority. I think India’s formal employment market is an inflection point. I think the last few months many things have happened. Even the implementation of the labor code, income tax release, epfo, PLI schemes, GCC waves. There are all many important things happening also in the digital businesses across the board, not just for our company. There is a significant incoming AI impact and our job is to to be ready to capture the opportunities that come up in this changing environment.
We will do it with the right sales focus and intensity, the right product mix and the right cost structure. I have been spending my first few months visiting clients and really listening to what’s there to challenges are what their issues are and calibrating our go to market accordingly. Lastly, and this is a point that Ashok also touched on, we have the balance sheet to be bold. The 600 crores of cash is a huge number and the buyback the board has approved today is an expression of capital discipline.
But I also want to make this point that that we are very keen on investing in the future, in the technology, in talent, the adjacencies that will make Team Lead the absolute default partner for Indian CSOs thinking and planning about their workforce as we go into the Future. So for FY27 I will be focusing on drop the deepening client relationships and focusing on operating leverage. My colleagues will now take you through the details of the individual businesses and overall financial performance.
We will then open the floor for questions and I look forward to some interesting conversations. Thank you. Over to you Bala.
Bala Subramaniam — Senior Vice President Enterprise
Thank you Subannath Good evening everyone and thank you for joining us. FY 2630 has been a year of two distinct stories. The first is a regulatory driven transition with one large MBSP client back in Q3 where about 20,000 associates moved directly onto the client’s own payroll as we highlighted in our last call. The second is the story of our underlying business which if you look past that legal transition, added meaningful headcount throughout the year. Because our operating performance diverges so materially from the absolute tech compliance, we think it is critical to look at both pieces transparently.
To give you the specific numbers, our general staffing business closed Q4 at about 2.87 lakh associates, reflecting a net sequential addition of over 4,500 associates for the full year, while our net headcount shows a decline of roughly 5,500. Adjusting for that Q3 transition reveals that the underlying business actually added about 14,000 associates. We also continue to widen our market footprint, adding about 120 new logos over the full year, with almost two thirds of those coming in under variable markup structures.
But the more important narrative for the year sits on the profit side. Despite the marginally negative volume year we delivered an 11% growth in PVG. This came primarily from operating leverage, specifically a structural reduction of both 20% in our cost to hire year on year. We achieved this by optimizing for fitment capability and productivity in our hiring mandates alongside an increased variabilization of our sources. Additionally, our broader digital backbone spanning compliance, payroll operations and associate engagement is allowing us to run a larger associate book without a linear proportionate increase in in our core team account.
We’ve spoken in prior calls about process and tech led leverage being a structural shift rather than a one time gain, and FY26 is the first year where that thesis is clearly visible in the profit line. Looking closer at our operational metrics, we delivered about 62,000 gross joinings in Q4 with 31%, that is about 19,000 coming in through our own internal hiring efforts. Interestingly, 24% of the cross joinings, which is about 15,000, were First Tank employees, reflecting our continued participation in the broader formalization of the Indian workforce Turning to tectorial performance, the picture in BFSI is really one of rotation rather than market expansion.
The unsecured retail credit cycle is still working through its correction, so the overall excellent hiring part really grown much. Instead, our growth in BSSI has come mostly from wallet share gains from incumbents at select private banks, small finance banks and mid sized NBFCs alongside a steady shift in our hiring footprint towards tier 2 and tier 3 markets. We believe the BFSI trust is largely behind us, though the shape of recovery will vary by segment. The consumer vertical was a bit mixed.
Consumer durables, particularly air conditioning, white goods and appliances performed strongly in Q4 in anticipation of a hot summer, further aided by the GST rationalization on several large categories back in September 25th. Consumer goods and retail however, were more uneven with rural and semi urban demand outpacing urban markets. Meanwhile, E Commerce and quick commerce have clearly shifted to a profitability and consolidation phase, meaning hiring growth was heavily concentrated among the top few category leaders rather than being broad based across the sector.
Last but not least in industrial and infrastructure we saw some
Operator
Your voice is taken.
Bala Subramaniam — Senior Vice President Enterprise
Yeah. Last but not the least in telecom, industrial and power infrastructure we saw some very encouraging structural developments. Power transmission, distribution, capex and digital infrastructure have emerged as meaningful new growth areas for us, while telecom services continued its steady expansion led by ongoing network rollouts. As we look ahead and enter FY27, the macro setup is highly supportive. We have the RBA report rated 5.25% to 10% inflation at decade lows, GDP tracking at 6.5% and the consumption pavements from GST 2.0 and income tax relief starting to flow through the system roll.
The Employment Outlook Report published in March confirms this possible sentiment, showing the net employment change improving to 4.7% for H1FY27, which is one of the highest readings we’ve seen in the last couple of years with 58% of surveyed employers planning to expand their workforces. However, there are three uncertainties that warrant flagging. Firstly, the four labor codes, while a clear long term tailwind for formalization and organized tax staffing will create some transition costs across the industry through FY27 as central and state tools get timelined from our side.
Given our existing compliance process and tech infrastructure, we are able to drive smooth transitions for our clients. Secondly, discretionary consumption, while improving, remains a little uneven and pocketed. Thirdly, the broader geopolitical environment carries second order risk that we’re watching closely specifically around energy and petroleum price inflation potential supply chain disruptions and tentative consumer sentiments. Ultimately, what we remain fundamentally confident about is our operating model.
The work we have put in over the last two years on commercial discipline, cost to hire, process and tech infrastructure and our direct to associate offerings have built deep operating leverage. This ensures engine will continue to convert into earnings growth even if volume growth moderates. We entered the new fiscal year with about 30,000 open positions. Moving forward, our in house hiring platform along with an increased focus on cost variabilization will be sharp areas of focus for us throughout FY 2020.
Thank you and with that I’d like to hand it over to Niti.
Niti Sharma — Chief Executive Officer Specialized Staffing
Thank you Bala Good evening everyone. FY26 was a year of diversifying across across skilled sectors in German fees for a specialized staffing business. While the market stayed selective in its hiring requirements, we did see an increase in demand for critical and niche roles in areas of AI, data cloud, cybersecurity and specialized functional roles in healthcare, engineering, R and D and BSSI sectors. We closed Q4 with 7,500 associates, a net addition of 1,000 associates in the last month and about 300 additions in the last quarter.
With our shift towards high value and niche skills hiring, our PHPM realization has gone up by 17% and our year on year PVT has grown by 15%. So we’re not just growing by adding headcount, but growth is also being driven by better realization of the mandatory bringing improved utilization and a stronger mix of product and skill sets. While demand for traditional IT skills has been moderated, there has been a steady and significant rise in hiring for roles such as AI developers, AI integrators and R and D and engineering professionals, a shift visible across both the IT services companies as well as DCCs.
Our DCC business remains a cornerstone of stability and growth for us with partnerships spanning over 110 DCCs. The segment contributed approximately 50% of our associate headcount and around 67% of our revenue. It continues to demonstrate substantial strength across high value verticals including bfs, Healthcare, Retail, FMCG and high tech engineering services driven by strategic demand, longer engagement cycles and deep customer relationships. A strategic move early in FY26 was a decision to partner with TCT to build and scale the BOT model.
This has also allowed us to to move meaningfully up the value chain, delivering integrated workforce solutions rather than just transactional staffing. The results have validated the strategy and the DCC segment remains one of our most important and enduring growth engines. We added 85 new logos in the last year, 24 of them in Q4 contributing nearly about 20 crores in annualized revenue. Simultaneously, remaining revenue momentum was safeguarded by deeper penetration into our existing customer base.
Our recruiter productivity has improved by 20% year on year reflecting the positive impact of investment in upskilling our recruiters. Building AI led efficiencies in our hiring processes and optimal use of our AI enabled APS that gave us leverage for faster and efficient hiring. Our global business grew by 200% in terms of revenue. A meaningful mindstore for us. It is now very well integrated with our India delivery. It is margin accretive and has been built as a capability extension of everything that we are doing here in India.
Operationally, FY26 has been a year of strong execution and discipline. We continue to improve recruiter productivity, utilization, fulfillment efficiency and overall delivery capacity and capability while maintaining very tight control on cost. Improvements in productivity and operating leverage has helped us manage seasonal non billable impact effectively during the year and supported margin improvement. As we move into FY27, our focus will remain on scaling this model in a disciplined manner with continued focus on profitability, productivity and high quality growth.
Thank you and with this I hand this over to Ramvi.
Suparna Mitra — Managing Director and Chief Executive Officer
Thank you Niti and good evening everyone. This is Jammy and I’ll walk you through the financial highlights for the quarter. I’ll also cover the highlights of our second leadership business as Nikun couldn’t join the call today. Before I begin, I would like to remind the participants that this call will cover only publicly available disclosed information in line with the JD ODR requirements and may contain forward looking statements that are subject to risks and uncertainty. Let me start with our DA business first.
DA continues to focus focus on making vocational education aspirational, accessible and affordable through Apprenticeship Embedded Program aligned with the National Education Policy. We have recorded a net addition of about 1,000 apprentices in Q4FY26. The business maintains CAPM stability, improved productivity and added 10 new client logos. In this quarter we have further strengthened our patent technology platform and offer operational processes to improve delivery efficiency, learner experience, compliance management and operating leverage skills.
Apart from manufacturing, dfsi, retail and logistics, we are seeing a strong momentum for apprenticeship in the GCC segment with increasing demand for building scalable talent pipelines and compliance under the Apprenticeship Act. Long term growth is expected to accelerate due to multiple policy and industry development. 1. Expansion of the Prime Minister Internship Scheme PMIS 3.0 with an allocated budget of 4,788 crore which is expected to strengthen industry participation. 2. Sustained policy focus on manufacturing growth through making India investments in electronics, semiconductors, EV and automobile sectors, increasing demand for skills and job areas.
Moving to the Overall financial highlights, Q4FY26 was a quarter where we demonstrated disciplined financial management even in a softer revenue environment. Let me give you the headline picture. First operating revenue came in at 2,925 crores for the quarter reflecting a 2% sequential decline. The primary driver was the first quarter impact of nbsp insourcing which we had flat in Q3 full year revenue growth transfer 6% EBITDA grew 8% Q of Q and 14 on a full year basis. PBG grew 30% year on year for the quarter and 36% for the full year.
Profit after tax grew 22% year on year for the quarter 33% for the full year. There is a 143 crore income tax refund pertaining to SS year 202425 received during this quarter which includes 13.1 crore of interest income excluding the treatment and associated interest underlying PBT growth is about 20% year on year. Our EBITDA margin for Q4 was 1.5% up 10 basis points over Q3 FY20 for the full year. EBITDA margin came in at 1.34% above 10 basis points points higher than FY25. Substantial PAV on improvement in general starting which moved to rs689 in Q4 from rs669 in Q1.
A steady trajectory that reflects pricing discipline and our variable market strategy FX seasonality. Building in Q4 has also contributed to sequential improvement in margin in HR services. Full year revenue and Delista grew at 22% and 23% respectively. We built 42 universities in our EdTech segment in the quarter and signed 17 new ones in the full year. Regtech is building its MRR based delivery combined digital and Services MRR of Rectech vertical students 3.6 crore per month. We do not expect HCM to be a draft back on group level margins as we scale the platform through XY27 on balance sheet and cash position which I think is a significant differentiator for GP.
We closed Q4 with net free cash of 600 crore following the receipt of 106 crore income tax refund for assessment year 2425. Outstanding EDM receivable stands at about 149 crore and assessment year 2023 24. Adjustments are completed and we continue to make progress in subsequent years. DSO in starting business stands at six days and funding exposure is at 14%, both consistent with prior periods and reflecting our receivable citizens on the new Labor Code. We have action the compliance requirements for core employees.
A provision of 5.82 crore has been taken into Q4 SR 26 reflected as an exceptional item on capital allocation. The Board has approved a buyback of up to 25% of free reserves at a price of 1600 rupees per share to be funded from our existing free cash. The intent is clear. We believe our stock is undervalued relative to the earnings power of the business and continued efficiency in cash conversion of the ebitda. With respect to outlook, there is a planned exit of about 10,000 headcount between our staffing and DA businesses in Q1 and Q2 of FY27 with us revisiting the low margin mandate.
There is no net margin impact from these transitions as the markups are very low. However, with the pipeline of open positions and client mandates, we are confident of ending H1FY27 with positive headcount damage. Thank you. I’ll hand back to the moderator to open the floor for questions.
Questions and Answers:
Operator
Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press Star and one on the Touchstone telephone. If you wish to remove yourself from the question queue you may press Star and two participants you are requested to use samples while asking the question. Ladies and gentlemen, we will wait for a moment while the question queue samples. A reminder to all you may press
Unidentified Participant
Star and one to ask a question. A reminder to all the participants you may press Star and one to ask a question. We have the first question from the line of Mahesh from DT Partners. Please go ahead. Hi, can you hear me? Yes sir, you’re audible. Hi. Hi. Thanks for taking my question and first of all really appreciate the decision move on capital allocation and a meaningful one. My question is a slightly broader question in strategy. I think if you look at the ecosystem there seems to be some of these upcoming startups who are basically positioning themselves as chat first, AI first kind of proposition for hiring on blue collar gig economy workers and so on.
And in that context someone like team these with its own proprietary data on placement history, attrition patterns, compliance records etc. On lacks of workers. Just curious, are there any initiatives or thought process you have where you think there is an opportunity to productize your data into more AI driven analytics or tools where the business could eventually over the long run start to have slightly more platform like profile that’s my first question.
Suparna Mitra
Yeah, that’s a very interesting question and it is actually something that we are actively working on in our strategy. Clearly the idea of spotting some specific opportunities where we can offer productized offerings is very much possible and there is some degree of work and we see these opportunities coming from exactly what you said, which is our large long experience and which is a combination of both data that gives us indication as well as working knowledge of how it actually happens on the ground.
So this combination of data giving insights on how one can offer productized offerings along with the operational and on ground execution is very much something that we are thinking of and working.
Unidentified Participant
Understood. Thanks for that suprema. Just one question Ramni. I think we’ve seen a couple of sort of notifications leading up to the results around some of the old legal proceedings or notices around EPFO etc. If you can just sort of give where we stand there. I mean we understand the history and this has been going on for a while so it’s nothing new but just some color would be helpful to the extent you can.
Suparna Mitra
Hi Mahesh. Yes. We have received a series of notices one from the PM department with respect to the surrender of PF Trust which happened long back and very soon demand of about 180 crore pertaining to how the process or the offsetting of profits and lots were done in the PF Trust level. But we have sufficient legal opinions. In fact we also obtained an NOC from the PF authorities at the time doing the full and finance agreement on surrender of the PF Trust. So we are very confident that this case, we can bring this case in our favor.
Same with few other notices pertaining to GST as well as another one with respect to PF implication on mean training. So even these two as well we are confident that we have sufficient legal case on our side and in the due course of time we can close these notices.
Unidentified Participant
Thank you. Thank you so much.
Operator
Thank you. We will take the next question from the line of Amit Chandra from HDAC Securities. Please go ahead.
Amit Chandra
Yeah, thanks for the opportunity. My first question is on the, you know is on the coast staffing business. Obviously we have seen some headwinds in dog enforcing for the last year. So from here on how do we see the next year panning out in terms of volume growth and also if you can give some color in terms of how the demand environment is panning out and obviously you have mentioned about the open mandates but how to see about the growth for the next year in the core staffing business and also in terms of margins, are we seeing some signs of the margins recovery from here?
Because as we are shifting away from BHSI to the other segments for the growth, which is comparatively a better margin segment. So can you see the EBITDA expansion also coming in for the next year?
Bala Subramaniam
Is it better now? Can you hear me?
Operator
Yes, sir. Please. Katie, thank you.
Bala Subramaniam
Yes, thanks for the question. As called out in the previous earnings call, the insourcing was specific to that one client and we don’t really see this as a broad based phenomenon so far. Also, with respect to our outlook for the new financial year, as he has called out during this call, we are starting this year with more open positions than we had in the previous quarter and the outlook for now remains quite positive. And, and that is also reflected in the employment outlook report that we published a couple of months ago.
And with respect to margins, yes, in the enterprise segment it’s more of a volume play. And with respect to margins, the outlook is a bit flattish. And as followed again earlier in this call itself, we continue to bank on operating leverage which has already played out in FY26, playing out further on in FY27 which needs not necessarily depend on volumes moderately.
Amit Chandra
Okay, so in terms of the margin for this, for the sector which has been suppressed over last many years, so as you said, it’s just a volume play. But in terms of volume also there is some part of the portfolio which is having some kind of regulatory stress or in sourcing that is happening because we are BFSI heavy and it’s happening mostly in the BFSI sector. So what portion of the existing portfolio is still having any kind of issues that can again pop up in the future or you’re saying that the existing portfolio is almost safe from any kind of regulatory headwinds?
Suparna Mitra
Hi Amit. Firstly the insourcing happened only with one large client and subsequent to that we didn’t see any trend of insourcing or regulatory headwinds. But if any new regulatory changes come in that we have to factor in, but at this stage we are confident of maintaining the growth momentum within our staffing business which will contribute to operating leverage. Because all of our fixed costs are fully absorbed and with the investments that we made in our technology and back end processing, we believe that margin expansion can continue to gain FY27.
And this is after taking into account a couple of planned exits that will happen in Q1 of FY27 which we have DA and the general staffing business because these are very low margin businesses and in fact, they are to some extent playing negative contribution on the bottom line. So we believe FY27 we will be consistently expanding margin in the staffing and BA vertical.
Amit Chandra
Okay. Okay. So on the specialized staffing, obviously we have seen strong growth in the specialized staffing, which is thanks to the exposure we had to GCC segment which is going pretty fast. So within that are we also offering some more value added services which can help us to expand the margins that we get from gccs. Because if I see some of the competition which is operating in the same segment, they’re operating at much higher margins versus what we are doing. Plus in terms of the hiring freeze that we’re seeing in the traditional IT services segment, is there any hopes of arrival there and what portion of the associates are associated to the traditional IT segment within specialized?
Niti Sharma
Yeah, Swamit, thank you for the question. You are right that while we had traditionally started with Pure Play hiring and staffing the services, today we are partnering with many of them on both models which give us higher margin. And along with that we are also doing models such as rpo. We are working on models like higher train deploy and also AI LED hiring. So there are a couple of new initiatives that we have started to grow our margins for VCC and other customers as well. But yes, DCCs remain the largest segment that our focus is and we are, we are looking at a multi product, multi level engagement with GCSS going forward.
Unidentified Participant
Okay, thank you.
Suparna Mitra
Thank you. Amit, sorry, you asked second question on IT services, whether there is that. Right, I missed that. Sorry.
Niti Sharma
Yeah. So Amit, while the traditional conventional tech hiring is obviously not, you know, scaling, we do see some hiring on those skill sets. Maybe like a lower single digit, 3 to 4% hiring. But the largest skill sets being hired are in AI and AI related and adjacent skills. So cloud, data security, governance, AI, ML coding, a large part of AI integrator roles. All of those hirings are happening in the past two quarters. Actually we’ve done, we’ve done about 500, 600 hires purely on these skills which give us not just the, you know, higher skill set, but also a higher margin and a higher value of the people that we are bringing into the workforce.
Yes, I think that’s what is really happening. Not the conventional tech, but anything related to AI. Their requirements are actually the demand is much higher.
Arjun Sabla
Okay, thank you.
Operator
Thank you. We will take the next question from the line of Dipesh Mehta from MK Global. Please go ahead.
Dipesh Mehta
Yeah, thanks for the opportunity. I’m sorry, your audio is not clear. Throughout the course. So I may ask something which you might have covered earlier. So first on the revenue growth, if I look let’s say general staffing remain fairly muted. You indicated some open position higher, but I missed the number. If you have said any number on open position side. So can you provide some sense on general staffing and any further detail in terms of let’s say which vertical or which industries where you see traction is picking up versus last year and any incremental data in terms of what will be the revenue share, let’s say across industries.
Why? If you can provide comparison, that would be helpful considering the NBFC related challenges which we face during the year. So that is question one. Second question is on the overall revenue and margin outlook. Earlier we indicated 30 percentage kind of growth possibility on EBITDA terms when last year started. How one should look let’s say in FY27 considering the potential margin expansion as well as revenue growth recovery which you are indicating. And last is on HR services, if you can provide some detail on that business.
Because from growth perspective I think this year Q4 is not playing out to the extent of last year. Obviously Q3 was better but even on segmental result what we reported performance seems to be weaker than last year. So just want to get sense earlier expectation of performance would improve consistently. It is not showing that thing. And last, more strategic perspective because now we have new leadership in place, kind of any strategy change which we plan for next one to two year perspective. If you want to highlight some of those changes.
Thank you.
Bala Subramaniam
Yeah, regarding your first question on open position, so we had called out that we are right now at about 20,000 open positions at the start of this financial year which is about 15 to 20% higher than where we were at the same point in time in the previous quarter. So like we had called out in many of the sectors, we believe that the trough is behind us. Of course there are some immediate headwinds because of labour costs, while there is a medium to long term tailwind that we see. Also geopolitical situations are leading to things being a little tentative at this point in time.
So it’s hard to really predict how it is going to shape up. But as things stand presently, our outlook is definitely positive. And regarding the muted revenue growth that you called out, we were sequentially growing until Q3 when this large transition happened and that led to the dip. But then we do see recovery because we already closed the year almost flattish even on volume. We recovered 70% of the loss in terms of volume and nearly 80% of the loss in terms of recurring revenue as well. And over to Ramni for the next question from the overall growth
Suparna Mitra
Hi Mitesh, regarding the margin outlook, while we can’t take any exact slide in now that all of our businesses are on growth trajectory, we are seeing strong quarter on quarter addition happening in our higher margin verticals like specialized staffing and ba. So we will be able to maintain year of on year HR growth of over 20% for FY27. And to your next question on HR services With respect to Q4 performance in comparison with Q4 of last year, again this is driven mainly by the ECTIC seasonal billing.
Last year FY25 majority of ectic billing happened in Q4 so that’s why you can see Q4H services EBITDA contribution is higher both in healthcare terms as well as margin terms. So whereas this year it is spread between Q3 and Q4. So on a full year basis HR services contribution on EBITDA is higher year on year by about 22%. However, if we are comparing only Q4 to Q4 it may appear as compared to Q4 of last year there is a slightest but on a full year basis the vertical has grown.
Dipesh Mehta
Ramani I am referring to the segmental number which we reported. I think so far we haven’t received your press release on data EBITDA related but if I look BSE from profit to negative kind of segmental performance is visible for full year perspective. That is what I was trying to understand.
Suparna Mitra
Sure, let me connect to you separately and and over to Suprana on the strategy. Yeah, thank you Pesh. So you know it’s just been about three and a half months for me and we are working very closely with the team. I think there are two big areas. One is on really focusing on our current business verticals and improving execution operational effectiveness, focusing a lot more on client relationships. And on the same side I’m simultaneously also looking for a longer range kind of strategy for which we need to do deep dive on what are some of the larger trends in the entire arena of employment.
Different models, different sectors, different types of companies, where their requirement is and how do we kind of accelerate some businesses, maybe see some new ones. So it’s a work in progress. I think the starting point has been much deeper engagement and understanding of what clients want, what do our customers want in terms of their workforce, what their challenges are and how we as a company can leverage our strengths and maybe also develop some new ones to be able to fulfill their requirements for being One of the most prominent and I would say impactful people, solution partners.
So I think that’s really the journey. Like I said, it’s very early days and we will start both deploying and communicating new pieces of our strategy in the coming quarters
Dipesh Mehta
And any area of investment based on the latest strategy, what you might plan to execute in quarter which could have implication on your margin trajectory.
Suparna Mitra
It’s too early, it’s too premature. We are still working on the strategy. So after which we will make any investment decisions corresponding to that, you know, finalization strategy.
Dipesh Mehta
Sure, sure. Thank you. And maybe.
Suparna Mitra
Thank you.
Unidentified Participant
Your voice dropped,
Operator
Sir. He has left the queue.
Unidentified Participant
Okay,
Operator
Thank you. Before we take the next question, a reminder to all the participants. You may press Star in one to ask a question. We will take the next question from the line of Hitendra Pradhan from Maximil Capital. Please go ahead.
Unidentified Participant
Hi, I hope I’m audible. So sorry if I I joined little bit late and I think the presentation is also not out so some of the questions might be repetitive. But ma’, am, if you can like, you know, give us, you know, what was the headcount growth for this year? I mean you mentioned it was muted if I heard it right. And also like, you know, what was the PAPM for FY26 and FY25 and what is your outlook going forward? Because you know, this has been kind of trending down and if you can like, you know, give us some silence of, you know, the general staffing and how the PAPM is evolving and why do you think, you know, whether it should, you know, go up or down and the competitive pressure and also the other factors like you know, the inflection point that you mentioned, give us some color on the PAPM and what are your thoughts on that?
Suparna Mitra
Sure, Nitindra. So firstly on the headcount on a sequential basis QOQ we have added about 5,500 headcount and on a full year basis there is a drop of 5,000 headcount which is led by the insourcing of the NBSC client. With respect to padm, we have been steadily improving. At an overall level for the current quarter we stand at 689 rupee, whereas in Q1 of this we opened with about 669. So one of the main drivers of this markup expansion is the fact that almost 70% of our new mandates are being signed on variable markup model.
And this we have been consistently doing over the last two and a half years and that have started constantly contributing to Our PABM expansion. Also we are focusing a lot more on new logo addition in mid sized as well as long tail accounts where our PABM is relatively higher. And we believe the same trend can be continued in FY20
Unidentified Participant
And then the PACM full year basis, what was it? I mean for quarter ending it was 6,000. For FY26, what was the PFM?
Suparna Mitra
Yeah, for the quarter it’s 689. We usually don’t measure it on a full year basis.
Unidentified Participant
What
Suparna Mitra
We did, what we closed last year was about 665.
Unidentified Participant
Got it, got it. And the key catalyst you are saying that you know you are moving more towards the variable markup model that would kind of accrue towards the apm.
Suparna Mitra
Yes. Also finding up higher margin or higher PAV employees.
Unidentified Participant
I mean this is general staffing kind of still kind of kind of drives our overall, you know, revenue and as well as the bottom line. I mean on the general staffing, you know, what are the kind of roles that we kind of, you know, in terms of staffing that we provide? I mean what is the usual kind of revenue or your salary per month kind of that we can provide in the general staffing.
Suparna Mitra
Staffing contributes about 90% of our overall top line and we will continue to drive the revenue growth in future as well. However, on bottom line, the contributions from specialized staffing degree, apprenticeship, edtech, I mean winner all the higher margin businesses and they’ve been growing at a faster pace than general staffing. So overall at the portfolio level there will be a consistent margin expansion. While the staffing contribution would be largely coming from operating leverage and slight improvement in papm.
The big shift will be coming from larger contributions from this higher markup for higher margin verticals.
Unidentified Participant
Okay, okay. And, but, but what is the like you know, the general staffing ma’, am, like you know, salary range of the staffs that we provide, I mean is it less than like 10,000 or more than that?
Suparna Mitra
No. In general talking our average salaries are about 26,000 rupees per employee per month. Okay. About 14,000 rupees per month. So it’s way above the minimum wage level.
Unidentified Participant
Got it, got it, got it. So, so, so, so the current kind of in few states we are hearing like, I mean the wage code impact is there. I mean the minimum wages are, you know, getting increased and all that won’t have a lot of impact on our business. Right. Since these are the Saturday for us.
Suparna Mitra
Yes. So in fact we caught earlier that short term may have a kind of negative impact on the Headcount growth because many companies are revisiting their headcount plans as well as revisiting the compliance under the new new labor codes, restructuring their CDC. So in the next 1, 2/4 it may slow down or to some extent it may impact the headcount growth. But as we’ve been saying, in the long run labor codes will drive formalization in employment, specifically in the staffing segment where 90% of the industry is led by unorganized starting
Unidentified Participant
The increasing burden of the compliance cost. I mean I assume the unorganized are not following all the rules and the, you know, the compliance cost and they are not, they don’t get the kind of depend to support this. But whereas we do so in the medium to long term, that could be beneficial. Is that understanding correct?
Suparna Mitra
No. Unorganized is because of multiple reasons. So one is lack of transparency and complexity. In the earlier labor laws, which are like 44 different labor laws, many contradictions, not rule based, led to the interpretation of the labor officers on ground. So that led to a lot of organized regional small staffing players operating outside the radar. So with the new labor force and once the Shram Sunida portal goes live, which is expected in the next 18 to 20 months, so there will be a central repository for all the labor related filings which is very much similar to income tax or gst.
So even the administration as well as compliance management would be transparent to the end clients as well. Because right now the end clients have no clarity on whether their staffing service providers are fully compliant or not. And they have no incentive to work only with organization players like us. So with the new labor codes and the natural infrastructure going live, there will be a lot more shift from unorganized to organized.
Bala Subramaniam
Yes. And just to add to that, to Ramani’s point, a lot of us seem to be focused more on what is the impact for employees. But not too many people seem to be talking about the impact for employers because first and foremost, neighborhoods are positioned towards ease of doing business, digitalization and centralization of compliance for employers. And the impact that we see for employees is completely downstream from that. And if you look at the pace of formalization in India, be it at a corporate level or at an employee level, it has almost doubled in the last seven, eight years.
The percentage of formal employees in India is 2x of what it was pre Covid and we are seeing the same play out at the employer level as well. So if anything, this is only going to incentivize more and more employers to choose and stick with Large formal, organized staffing players such as teamlease rather than, you know, bulk of the industry which is today operating outside the radar.
Unidentified Participant
Okay, okay. And finally, finally ma’, am, like any outlook you want to provide in terms of the headcount growth as well as TOPM and the EBITDA margin.
Suparna Mitra
Specific to H1, as I said, we have a planned headcount transition in staffing and TA vertical. However, on a half year basis as well as a full year basis, we will be positive. And also on the bottom line, we are targeting upwards of 20% growth.
Unidentified Participant
Okay, okay, thank you and all the best.
Suparna Mitra
Thank you.
Operator
Thank you. We will take the next question from the line of Pratham Kankaria from Quantum anc. Please go ahead.
Dipesh Mehta
Yeah. Hi team. So just wanted to know your thought. So with what AI is doing to the IT companies. So if I try to visualize it for the staffing companies say on the pyramid, so on lower level there could be a lot of reduction in the head council at least what we have seen in the past means that kind of hiring feels difficult given the automation and all these things happening. So how do we view this scenario For Team Lead Z1 in Specialized? Earlier you know we used to hire entry level jobs jobs for the IT companies.
Niti Sharma
Yeah, thank you for your question. Even traditionally we’ve not hired freshers as much as you hired laterals. Okay, so that is, that is one shift. The other is that while yes, AI is disrupting a lot of job roles. Like there are jobs which are like manual testing, entry level software developer roles, those are going away but there are newer jobs that are getting created. Also apart from the IT services companies, there are jobs for these roles which is AI integrators, AI developers, data engineers, data scientists.
All these jobs are getting created in GCCs as well as a lot of large non tech companies as well. So what we see is that while yes, the volume play for IT services will not be as high as what IT used to be till that is three years ago. This volume will come in from different segments and in different job roles and very different skill sets. So you know like we say that the 5 million IT workforce will get to 10 million at some point in three to four five years time frame. What will change is who’s hiring, where are they hiring, what are they hiring and what do they want these workforce to do.
So that shift is very evident already. We’ve seen a large demand in AI and AI agent adjacent skill set. We believe this will only grow up the ladder. We do see some, you know, traction in the middle level hiring, you know, which is, which is largely focusing on the people with domain and AI skills. And I believe that demand will also increase as we go along because almost all organizations are now on the, on the train drawing board discussing their AI adoption strategy. So we do see these demands increasing while the traditional conventional tech demands are clearly going down, as you rightly call it.
Dipesh Mehta
So that should try to offset what we could, what we could lose in volume. But could we gain that on the value front
Niti Sharma
Eventually? Yes, probably in about, you know, in over 18 to 24 months time frame. Not. Not immediately.
Dipesh Mehta
Sure, sure. Thanks.
Arjun Sabla
Thanks.
Operator
Thank you very much, ladies and gentlemen. We will take that as the last question. I now hand the conference back to the management for the closing comments. Thank you. And over to you, ma’. Am.
Suparna Mitra
Thank you all for your very engaging questions and overall confidence in the kind of effort that we’re putting in the strategy and in continued execution, we hope to continue this good run of profit performance along with greater revenue growth in this in the next few quarters. Thank you and see you the next time around.
Operator
Thank you members of the management. On behalf of HDFC securities, we conclude this conference. Thank you all for joining us. And you may now disconnect your lines. Thank you.