India’s TeamLease Services reported an 8.3% decline in third-quarter profit, falling short of market expectations due to a significant increase in expenses. The staffing services provider’s consolidated net profit for the quarter ending December 31 dropped to 284.3 million rupees ($3.29 million), down from 310 million rupees a year earlier. Analysts had anticipated a profit of 310.5 million rupees, according to data from LSEG. Following the announcement, the company’s shares fell by 2%.
The rise in expenses was driven by a 19% increase in employee costs and a 34% surge in subcontracting expenses, leading to a total expense increase of 19.7% to 29.03 billion rupees. Staffing companies faced challenges in the banking, financial services, and insurance (BFSI) sectors, as well as in consumer packaged goods, with hiring delays attributed to the festive season, analysts noted.
Revenue from TeamLease’s general staffing segment, which accounts for over 90% of total revenue, increased by 20%. However, revenue from its smaller specialized staffing division, which includes IT staffing services, saw a 7% decline. Overall, total revenue rose by 19.5% to 29.21 billion rupees, surpassing analysts’ average expectation of 28.67 billion rupees.
TeamLease Managing Director Ashok Reddy stated, “We are planning to expand our IT staffing sales operations in Singapore and the Middle East. The BFSI sector may continue to pose challenges for our staffing business due to recent regulations issued by the Reserve Bank of India.” Peer company Quess Corp is expected to release its results later today.
