Indian staffing firm TeamLease's Q1 profit misses estimates as costs bite

BENGALURU - India's TeamLease Services posted a smaller-than-expected quarterly profit on Wednesday, hurt by higher expenses and weak demand in its specialised IT staffing business.

The company, which hires and trains people before helping them find jobs, said its consolidated net profit dropped 21.3% to 207.9 million rupees ($2.48 million) year-on-year in the three months ended June 30, below analysts' estimate of 241.7 million rupees, as per LSEG data.

Expenses rose 19% to 25.74 billion rupees, hurt by salary hikes and higher employee benefits costs.

Revenue from its specialised IT staffing services business climbed 3.6%, whereas that from its general staffing business rose 20%.

Staffing solutions providers have been impacted by companies in the information technology sector slowing down hiring amid an uncertain macroeconomic environment and tech clients cutting spending on non-essential projects.

Headwinds in the IT industry continue to impact the growth in the company's specialized staffing business. While there has been consistent growth in GCC clients, net headcount loss with IT services clients was noted in the quarter, the company said in an exchange filing.

Total revenue for the company rose 18.8% to 25.80 billion rupees.

Teamlease's shares closed 1.02% higher ahead of results.

($1 = 83.6660 Indian rupees)

(Reporting by Aleef Jahan in Bengaluru; Editing by Nivedita Bhattacharjee)