TeamLease Services: Navigating Growth and Strategic Shifts in Q2 FY26

TeamLease Services Limited, a leading player in India's human capital management sector, has reported a consistent performance for the second quarter of Fiscal Year 2026. The company, known for its extensive range of staffing and HR solutions, demonstrated resilience and strategic execution amidst a dynamic market environment. For Q2 FY26, TeamLease recorded a consolidated total operating revenue of 3,032 crore, marking a 5% quarter-on-quarter increase. This revenue growth translated into a robust 24% rise in EBITDA and a 10% increase in Profit Before Tax (PBT) on a quarter-on-quarter basis, underscoring the company's operational efficiency and cost optimization efforts.

The quarter saw a net addition of over 7,000 headcount across all three employment business units, reflecting a 3% quarter-on-quarter growth at the company level. The General Staffing and Allied Services segment continued to be the primary revenue driver, contributing 2,783 crore, or approximately 91.79% of the total operating revenue. This segment added around 8,000 headcount, with a notable 23% of these additions stemming from new client acquisitions. The Specialized Staffing Services segment also showed strong momentum, generating 191 crore in revenue and adding 320 net headcount, largely propelled by Global Capability Centers (GCCs). The 'Other HR Services' segment, while smaller with 57 crore in revenue, achieved breakeven EBITDA for the quarter, primarily due to an uptick in EdTech billing.

Strategic Initiatives and Market Dynamics

TeamLease's strategic focus on its Degree Apprenticeship (DA) program continues to yield positive results. The program added approximately 3,000 trainees in Q2 FY26, driven by initiatives like NAPS (National Apprenticeship Promotion Scheme) and WILP (Work Integrated Learning Program). Recent amendments to the Apprenticeship Act in September 2025, which include revised stipend levels, formal recognition of degree apprenticeships, and the inclusion of academic institutions in tripartite agreements, are expected to provide a significant boost to the apprenticeship ecosystem. The company is also actively working on monetizing its apprenticeship-linked product lines, such as Managed Training Services (MTS), to build entry-level talent pipelines for companies.

In the specialized staffing segment, the company's global business has become EBITDA positive, contributing about 4% of net revenue. This achievement is attributed to synergies between India delivery and global operations, fostering an integrated consulting-led approach that opens new revenue streams and offshore delivery opportunities. Management anticipates continued momentum in new client acquisitions, improved margin trajectory, and deeper penetration in global markets in the second half of FY26. The company's commitment to operational excellence is evident in its improved FTE productivity, which reached 382, allowing it to manage headcount growth efficiently without proportional increases in overhead.

Management Outlook and Financial Health

Management expressed optimism for the coming quarters, expecting an acceleration in previously muted sectors in Q3 FY26. They project maintaining a 25% year-on-year EBITDA growth for the full fiscal year, assuming no significant policy changes or external disruptions. The demand for employment is gradually picking up, although not as aggressively as in previous years, but is expected to remain positive. The HR-tech business is on a path to recovery, with capital investments completed and operational investments expected to yield significant revenue and bottom-line contributions within the next two quarters. The EdTech business is also expected to maintain its seasonal higher billing and profit contribution in Q3 and Q4.

TeamLease's financial health remains robust, supported by a free cash balance of 320 crore. The company's focus on building a 'long tail' of growth accounts, comprising smaller clients with higher Per Associate Per Month (PAPM), is a strategic move to enhance overall profitability, complementing the volume growth from larger clients. While the PAPM has remained relatively stable, the strategic shift towards variable markup models and smaller accounts is expected to contribute to margin expansion in the general staffing business over time.

Segment Performance Overview

Conclusion

TeamLease Services Limited's Q2 FY26 performance reflects a company that is strategically navigating a complex market. Despite uneven sectoral recoveries, the company's focus on operational excellence, client acquisition, and strategic initiatives in apprenticeships and global expansion has driven consistent growth. The management's forward-looking statements indicate a confident outlook for sustained revenue and EBITDA growth, underpinned by disciplined execution and a clear vision for expanding its footprint in India and beyond. The company's ability to adapt to market realities and leverage policy tailwinds positions it for continued progress in the dynamic human capital services industry.