How to read the numbers of staffing companies in India

TeamLease reported revenue of ₹11,155 crore for FY25, up roughly a fifth on the year. Its EBITDA grew about 6%. Over FY21 to FY25, HDFC Securities calculates, revenue compounded at 23% while EBITDA compounded at 9%, and the EBITDA margin slid from 2.0% to 1.2%.

Read quickly, that looks like a business in trouble. It mostly is not. It is what staffing companies in India look like when the fastest-growing part of the book is general staffing, and it is why the usual margin screen tells you so little about them.

01Why the margin is small on purpose

When a staffing firm places an associate on a client's shop floor, the associate is on the firm's payroll. The client pays the full wage, the statutory contributions and a markup. All of that shows up as the firm's revenue, though almost all of it leaves again as salary. At TeamLease, employee costs run at around 94% to 95% of revenue.

So a 1.2% margin on a pass-through book is closer to a service fee than a profit squeeze. The useful question is how much capital that fee ties up, and how quickly it comes back.

A 1.2% margin on a pass-through book is closer to a service fee than a profit squeeze.

03The four numbers to read instead

• Revenue mix. What share comes from specialised or IT staffing, recruitment process outsourcing, payroll and compliance services? Industry estimates put general staffing at 1% to 2% EBITDA and specialised staffing at 7% to 9%. A rising specialised share is the clearest sign a firm is getting better, not only bigger.
• Debtor days. The firm pays associates every month whether or not the client has paid. Every extra week of receivables is working capital the firm has to fund. Compare days sales outstanding across years and against peers before anything else.
• Return on capital employed. A capital-light pass-through business with tight collections can earn a respectable return on a thin margin. One with slow collections cannot. This is the number that tells you whether the model works.
• Client and sector concentration. Headcount is tied to specific contracts. In FY26 TeamLease absorbed a cut of roughly 27,000 associates when a lending client brought work in-house, which shows how quickly a single relationship can move the top line.

Payment terms sit underneath two of these four. A firm that concedes 60-day terms to win a contract has cut its price as surely as if it had cut its markup, a point we make in payment terms are price.

05What to do with this

Investors screening listed or private staffing companies should start with mix, debtor days and RoCE, and ask for them by segment. A firm that cannot show its specialised share rising is buying growth with working capital.

Founders running a staffing business below ₹50 crore should price collection terms as hard as markup, and build the specialised or compliance line before chasing more general headcount. The volume base funds the business; it does not make it valuable.

MSMEs buying staffing services should ask a prospective vendor how it handles code-related cost changes and state-level filings, because under the codes the principal employer still carries exposure if the vendor gets it wrong.

For the full sector picture, including segment economics and the major players, read our recruitment and staffing industry report. For the demand pool that is lifting specialised margins, see how the GCC boom is re-rating staffing. If you are preparing a staffing business for a raise or a sale, our due diligence team reads these numbers for a living.