Tech companies spending crisis hits India’s largest recruiter Quess Corp hard

BENGALURU:

Spending and staff cuts at information technology and IT service companies have halved sector revenues for one of India’s largest recruiters, Quess Corp Ltd, its chief executive, Guruprasad Srinivasan, said Friday.

Quess, which trains individuals for a wide variety of jobs in the IT, hospitality and gig industries, said its IT and ITES clients were delaying hiring new hires.

Quess’ IT human resources and selection division, which normally reports margins of 13 to 17 percent and contributes 7-8 percent to the company’s core revenues, saw revenues halve.

Demand for IT candidates it trained has fallen to a fifth of its usual number in the current quarter, the company said.

Customers are “trying to delay[the onboarding]for 30 days or 45 days… (something) that we’ve never had in the past,” Mr Srinivasan said in an interview with Reuters.

The Bengaluru-based company has also faced a sharp rise in wages that has hurt margins at India’s top IT companies.

Reuters reported in August that India’s top IT services companies are freezing or cutting employee bonuses amid fears that tighter budgets at US and European customers would severely weigh on their own profits after a pandemic-induced boom.

Srinivasan said the fiscal fourth quarter from January to the end of March “should be slightly better”, although he did not expect revenues to rise until the first quarter of the next fiscal year.

Also known for its Terrier security services and facility maintenance staff, Quess signaled the expansion of economic activity to smaller Indian towns as a sign of rising job demand despite high inflation.

Srinivasan also said the company’s Monster.com job site, which operates in India, Southeast Asia and the Middle East, will break even by the end of March 2024.

The job site is part of the product-driven unit that accounted for just 3.5 percent of revenue in the second quarter. The segment will continue to burn cash, with 60 percent of its investments spent on marketing and the rest on product development, Quess said.

Quess’ second-quarter consolidated profit rose 12 percent to 4.21 billion Indian rupees ($52.14 million), but saw its core profit margin fall 32 basis points to 3.16 percent, driven by higher wages and the product-driven sector.

($1 = 80,7500 Indian Rupees)