"Annexure G"
ECONOMIC OUTLOOK Global Economy
The global economy remained resilient during 2026 despite heightened geopolitical uncertainties and evolving macroeconomic challenges. According to the International Monetary Fund (IMF), global economic activity has been shaped by two contrasting forces: geopolitical tensions that have disrupted energy markets and global supply chains, and rapid technological advancements particularly in Artificial Intelligence (AI) that have supported productivity, investment, and demand across technology-intensive sectors.
The IMF projects global GDP growth at 3.0% in 2026, with a recovery to 3.4% in 2027. While growth has moderated compared to previous years, technology-led investments, resilient labour markets, and sustained business spending have helped offset the impact of geopolitical disruptions in several major economies. Inflationary pressures have resurfaced due to elevated energy and commodity prices, resulting in tighter monetary conditions across several economies. Central banks continue to prioritize price stability while balancing the need to support economic growth, leading to a cautious global policy environment.
Global trade has remained resilient, although higher transportation costs, supply chain adjustments, and trade fragmentation continue to influence cross-border commerce. Businesses are increasingly focusing on supply chain diversification, regional manufacturing hubs, digital transformation, and operational resilience to mitigate geopolitical and economic risks.
Looking ahead, the global outlook remains cautiously optimistic. Continued investments in digital technologies, AI, infrastructure, and productivity-enhancing innovations are expected to support medium-term growth. However, geopolitical developments, commodity price volatility, inflation dynamics, and evolving trade policies remain key factors that could influence the pace of global economic expansion.
Indian Economy
India continued to be one of the fastest-growing major economies during FY2026, demonstrating resilience amid global geopolitical uncertainties, trade disruptions and volatile commodity markets. Strong domestic consumption, sustained infrastructure investments, a robust services sector and supportive policy measures enabled the economy to maintain healthy growth momentum despite a challenging external environment. According to the IMF, Indias economy is projected to grow by 6.4% in 2026, maintaining its position among the worlds fastest-growing large economies. The growth outlook is supported by favourable demographics, rising private consumption, increasing investments, expanding manufacturing capabilities and continued digital transformation.
During FY2026, private consumption remained a key driver of economic activity, supported by stable inflation, easing interest rates, improving household incomes and resilient demand across urban and rural markets. Public infrastructure spending, alongside increasing private sector capital expenditure, strengthened investment activity and contributed to broad-based economic expansion. Manufacturing and services sectors continued to demonstrate strong momentum, aided by policy reforms, production-linked incentives, expanding digital infrastructure and increasing participation in global supply chains. Indias macroeconomic fundamentals remained robust during the year. Inflation moderated to comfortable levels, allowing the Reserve Bank of India to maintain a supportive monetary policy stance. Strong GST collections, healthy foreign exchange reserves and sustained foreign direct investment inflows reflected the economys resilience and reinforced investor confidence.
India also continued to strengthen its position as a global manufacturing and services hub through initiatives such as Make in India, Digital India, Production Linked Incentive (PLI) schemes, investments in semiconductor manufacturing, renewable energy, digital public infrastructure and logistics development. Expanding free trade agreements and diversification of export markets further enhanced Indias integration with global value chains. Looking ahead, Indias long-term growth prospects remain favourable, supported by structural reforms, rising formalisation of the economy, expanding digital adoption, infrastructure development and a growing consumer base. While external risks such as geopolitical tensions, global inflationary pressures and trade uncertainties continue to warrant close monitoring, the countrys strong domestic fundamentals are expected to sustain its growth trajectory over the medium term
INDUSTRY OVERVIEW
HR Professional Services Industry Overview
The global HR Professional Services industry continues to witness steady growth, driven by increasing workforce complexities, digital transformation, regulatory compliance requirements, and the growing adoption of technology-enabled HR solutions. Organizations across industries are increasingly outsourcing critical human resource functions such as recruitment, talent acquisition, workforce planning, payroll management, employee engagement, and HR consulting to improve operational efficiency, reduce costs, and access specialized expertise. According to Mordor Intelligence, the global HR Professional Services market is estimated at USD 89.75 billion in 2026 and is projected to reach USD 126.85 billion by 2031, registering a CAGR of 7.17% during the forecast period. The industrys growth is being supported by rising investments in digital HR transformation, increasing adoption of AI-powered workforce analytics, cloud-based HR platforms, and the growing need for organizations to attract, retain, and develop skilled talent in an increasingly competitive labour market.
Recruitment & Talent Acquisition remains the largest functional segment, accounting for 26.88% of the market in 2025, reflecting continued demand for specialized hiring solutions across industries. Meanwhile, Workforce Planning & Analytics is emerging as one of the fastest-growing segments, expected to expand at a CAGR of 11.9% through 2031, as organizations increasingly leverage data-driven decision-making for workforce optimization. On the provider side, Consulting & Advisory Services accounted for 37.52% of the market in 2025, while Software-as-a-Service (SaaS)-based HR solutions are projected to grow at a robust 14.67% CAGR, highlighting the accelerating shift toward digital HR ecosystems.
Asia-Pacific represents the largest regional market, supported by rapid economic growth, expanding enterprise activity, increasing digital adoption, and a growing demand for outsourced HR solutions. The regions strong business environment, coupled with rising investments in technology-enabled human capital management, is expected to continue creating significant opportunities for HR service providers.
As businesses continue to focus on workforce agility, compliance, productivity, and employee experience, the HR Professional Services industry is expected to remain on a sustained growth trajectory, supported by continued innovation in artificial intelligence, cloud-based HR platforms, workforce analytics, and talent management solutions.
Indian HR Professional Services Industry
India continues to be a key contributor to the Asia-Pacific HR Professional Services market, supported by its large workforce, expanding corporate sector and accelerating digital transformation. As organisations increasingly focus on attracting, retaining and developing skilled talent, demand for professional HR services including recruitment, talent acquisition, workforce planning, payroll management and HR consulting continues to grow across industries. The countrys expanding IT & telecom, manufacturing, healthcare, BFSI and services sectors are further strengthening the need for specialised and technology-enabled HR solutions.
The growing adoption of cloud-based HR platforms, AI-enabled recruitment, workforce analytics and digital employee management solutions is transforming the HR services landscape. Businesses are increasingly leveraging outsourced HR capabilities to improve operational efficiency, enhance employee experience and address evolving regulatory and workforce requirements. This shift towards digital HR ecosystems is expected to support sustained demand for both consulting-led and technology-driven HR service providers.
Looking ahead, Indias favourable demographic profile, increasing formalisation of employment, expanding enterprise base and continued investments in digital technologies are expected to position the country as an important growth market within the Asia-Pacific region. As Asia-Pacific remains the largest regional HR Professional Services market and is projected to grow at a 10.07% CAGR through 2031, India is expected to benefit from these structural industry trends and the increasing adoption of modern workforce management solutions
Economic overview & Industry Sources: IMF Deloitte Mordor Intelligence
The favourable macroeconomic environment, coupled with the increasing adoption of outsourced HR and workforce management solutions, has created significant opportunities for organised staffing and HR service providers. Leveraging these structural industry trends, Happy Square Outsourcing Services Limited has continued to strengthen its position as an integrated HR outsourcing partner by expanding its service portfolio, enhancing technology capabilities and broadening its client base across diverse industries. With a scalable business model, Pan-India presence and technology-driven workforce solutions, the Company remains well-positioned to support the evolving human capital requirements of businesses while delivering sustainable long-term growth.
COMPANY OVERVIEW
Happy Square Outsourcing Services Limited is an integrated Human Resource (HR) outsourcing and workforce solutions company operating under its flagship brand White Force. The Company provides end-to-end workforce management solutions encompassing temporary staffing, permanent recruitment, recruitment process outsourcing (RPO), payroll processing, compliance management, onboarding services, apprenticeship staffing and facility management. Leveraging a technology-enabled business model, the Company delivers scalable, cost-efficient and compliance-driven HR solutions to help organisations optimise their workforce requirements across diverse industries.
Since its inception, the Company has established a strong operational footprint with a Pan-India presence and has built long-standing relationships with clients across sectors including public sector undertakings, logistics, manufacturing, FMCG, retail, healthcare, engineering and technology. The Company continues to uphold high standards of quality, information security, environmental management and occupational health and safety.
Technology remains a key differentiator for the Company. Through its proprietary AI-powered Applicant Tracking System (White Force Plus) and integrated HRMS & Payroll platform, the Company streamlines recruitment, payroll automation, compliance management and workforce analytics. Its digital employment platform, white-force.com, hosts a database of over one million registered candidates, enabling faster talent acquisition and efficient workforce deployment across multiple industries. Backed by experienced leadership, a scalable operating model and a customer-centric approach, Happy Square is well positioned to capitalise on the growing demand for organised HR outsourcing and staffing solutions in India.
Technology is at the core of Happy Squares service delivery model. The Company has developed proprietary digital platforms, including the AI-powered White Force Plus Applicant Tracking System (ATS) and the White Force Payroll HRMS Portal, enabling end-to-end automation of recruitment, payroll, attendance, compliance and workforce management. Built entirely in-house, these integrated platforms leverage AI-driven hiring, real-time analytics and secure cloud infrastructure to enhance recruitment efficiency, reduce manual intervention, improve compliance and deliver a seamless experience for both clients and employees.
OPERATIONAL PERFORMANCE
During FY2026, Happy Square Outsourcing Services Limited continued to strengthen its operational footprint by expanding its client base, enhancing workforce deployment capabilities and deepening its presence across diverse industry verticals. The Company maintained a Pan-India presence across 20+ states, serving 200+ clients through its integrated HR outsourcing and staffing solutions.
As on 31 March 2026, the Company had deployed 4,980 associates, supported by a dedicated team of 161 core employees, reflecting its scalable operating model and execution capabilities. During the year, the Company also witnessed a higher contribution from the private sector, which accounted for 62.37% of total revenue, while maintaining a well-diversified customer portfolio across public sector undertakings, logistics, technology & IT and other industries. This diversified business mix, combined with its technology-driven recruitment and workforce management platform, continued to strengthen operational resilience and position the Company for sustainable growth.
FINANCIAL POSITION
| Particulars (in Lakhs) | FY26 | FY25 |
| Revenues | 10,916.62 | 9,741.46 |
| Other Income | 71.74 | 26.89 |
| Total Income | 10,988.36 | 9,768.35 |
| Raw Materials | 9,535.65 | 8,496.00 |
| Employee costs | 264.40 | 200.58 |
| Finance Costs | 94.73 | 115.32 |
| Depreciation | 76.19 | 45.19 |
| Other expenses | 401.93 | 113.52 |
| Total Expenditure | 10,372.91 | 8,970.61 |
| PBT | 615.46 | 797.74 |
| Tax | -5.56 | 203.25 |
| PAT | 598.40 | 594.49 |
KEY FINANCIAL RATIOS
| SN Ratio | FY26 | FY25 | % Change | Reason for variance |
| 1 Current Ratio (in times) | 3.32 | 1.53 | 117.10 | During the year, the Company completed its Initial Public Offering (IPO), whose object was deployment of funds towards working capital requirements. The IPO proceeds, being equity funds, were accordingly invested in working capital, resulting in a significant increase in current assets. Since no corresponding increase occurred in current liabilities, the working capital ratio has improved substantially over the previous year. |
| 2 Debt-Equity Ratio (in times) | 1.17 | 0.17 | 85.05 | During the year, the Company completed its Initial Public Offering (IPO), resulting in a significant increase in the equity base through fresh infusion of share capital and securities premium. The Debt-Equity Ratio has therefore improved, reflecting a strengthened capital structure. |
| 3 Debt Service Coverage Ratio | 8.11 | 9.40 | 13.73 | The improvement in DSCR is due to increase in Operating profits which is due to increased revenue of company. |
| 4 Return on Equity (%) | 14.22 | 63.10 | -77.47 | The Return on Equity has decreased during the year despite an increase in the absolute net profit. The variance is attributable to the significant expansion of the equity base consequent to the fresh infusion of share capital and securities premium through the IPO completed during the year. Since the IPO proceeds have been recently deployed towards working capital, the incremental returns on the enhanced equity base are yet to fully reflect in the profitability. As the deployed funds generate commensurate returns in subsequent periods, the ratio is expected to normalise |
| 5 Inventory Turnover Ratio | NA | NA | NA | Not Applicable, as the Company does not maintain inventories. The Company, post completion of its IPO, has strategically expanded its customer base and onboarded new clients, several of whom operate on extended credit cycles. |
| 6 Trade Receivables Ratio Turnover | 3.34 | 5.15 | -35.12 | Additionally, in order to consolidate its market position and drive revenue growth in a competitive business environment, the Company has extended relatively longer credit periods to certain customers. Since these receivables are recent and within the normal collection cycle, the management is confident of their recovery. No significant default or doubtful debt has been identified as at the balance sheet date |
| 7 Trade Ratio Payables Turnover | 149.06 | 86.69 | 71.95 | The ratio has increased due to the effective system in place to meet the timely creditor payments comparing the previous years |
| 8 Net Capital Turnover Ratio | 2.77 | 11.00 | -74.79 | The Net Capital Turnover Ratio has decreased during the year primarily on account of a significant expansion in working capital, which grew disproportionately relative to the growth in revenue from operations. The increase in working capital is largely driven by the substantial rise in trade receivables during the year, which increased by approximately 86% as against a revenue growth of approximately 15%. As explained in the note on Trade Receivables Turnover Ratio, this increase in receivables is attributable to strategic expansion of the customer base post-IPO, onboarding of new clients operating on extended credit cycles, and extension of longer credit periods to consolidate market position. As collections normalise and revenue growth catches up with the expanded working capital base, the ratio is expected to improve in subsequent periods. |
| 9 Net Profit Margin (%) | 5.48 | 6.17 | -11.22 | The Net Profit Ratio has decreased from 6.17% to 5.48% during the year. The decrease is primarily on account of IPO and listing related expenses charged to the Statement of Profit and Loss during the year, which are one-time and non- recurring in nature. The absolute net profit of the Company has, however, increased during the year. |
| 10 Return on Capital Employed (%) | 15.18 | 56.44 | -73.10 | The Return on capital employed has decreased during the year despite an increase in the absolute net profit. The variance as stated in para d above, is attributable to the significant expansion of the equity base through IPO proceeds. Since the IPO proceeds have been recently deployed towards working capital, the incremental returns on the enhanced equity base are yet to fully reflect in the profitability. As the deployed funds generate commensurate returns in subsequent periods, the ratio is expected to normalise |
FUTURE OUTLOOK
Positioned to Capitaliseon Indias Evolving Workforce Landscape
Indias organised staffing and HR outsourcing industry is expected to witness sustained growth, supported by increasing formalisation of employment, digital transformation, expanding Global Capability Centres (GCCs), rising demand for flexible workforce solutions and evolving regulatory requirements.
Strategic Priorities
Expand Client Portfolio
Strengthen relationships with existing customers while acquiring new clients across high-growth sectors including logistics, manufacturing, technology, healthcare and retail.
Technology-led HR Solutions
Continue enhancing AI-powered recruitment, HRMS and payroll platforms to improve hiring efficiency, workforce analytics, compliance management and customer experience.
Strengthen Private Sector Presence
Increase contribution from private enterprises while maintaining a balanced portfolio across government and commercial clients to enhance revenue diversification.
Geographic Expansion
Deepen presence across existing markets and expand into new regions to strengthen nationwide service delivery capabilities.
Enhance Service Offerings
Broaden value-added HR services including Recruitment Process Outsourcing (RPO), payroll outsourcing, compliance management, apprenticeship programmes and integrated workforce solutions.
Operational Excellence
Focus on process automation, digital transformation and efficient workforce deployment to improve productivity, scalability and long-term profitability.
SWOT Analysis
| Strengths | Weaknesses |
| Integrated HR outsourcing platform offering staffing, recruitment, payroll, compliance and workforce management services. | Business performance remains influenced by overall hiring trends and employment demand across industries. Government sector continues to constitute a meaningful share |
| Strong Pan-India presence across 20+ states with a diversified client base of 200+ clients. Proprietary AI-powered White Force Plus ATS and integrated HRMS & Payroll platform enhance operational efficiency and customer experience. | of revenues, making the business susceptible to delays in project awards and payment cycles. Highly competitive industry with pricing pressure from organised and regional staffing service providers. |
| Scalable operating model with 4,980 associates deployed and supported by 161 core employees. Opportunities Growing demand for organised staffing, HR outsourcing and workforce management solutions across India. | Continuous investment is required in technology and digital infrastructure to remain competitive. Threats Changes in labour laws, statutory regulations and compliance requirements may increase operational complexity. |
| Increasing adoption of AI, cloud-based HR platforms and digital recruitment solutions presents opportunities for technology-led service providers. Expansion of Global Capability Centres (GCCs), manufacturing, logistics and digital economy is expected to drive workforce demand. | Economic slowdown or subdued hiring activity could impact demand for recruitment and staffing services. Intense competition from established staffing companies and emerging HR technology platforms may impact margins. |
| Rising preference for flexible staffing, recruitment process outsourcing (RPO) and payroll outsourcing across enterprises. | Cybersecurity risks and technology disruptions may affect business continuity and customer confidence. |
| Opportunities | Threats |
| Opportunity to expand into new geographies, industry verticals and value-added HR solutions. | Talent shortages and increasing employee attrition may affect service delivery and operating efficiency. |
RISK MANAGEMENT
The Company operates in a dynamic business environment where effective risk management is integral to achieving sustainable growth and creating long-term stakeholder value. Happy Square Outsourcing Services Limited has established a structured risk management framework to identify, assess, monitor and mitigate key business risks across its operations. The Companys risk management approach focuses on strengthening operational resilience, ensuring regulatory compliance, safeguarding information systems and maintaining business continuity while supporting strategic objectives.
Key risks faced by the Company include fluctuations in hiring demand, changes in labour laws and statutory regulations, customer concentration, talent availability, employee attrition, technology disruptions, cybersecurity threats and evolving competitive dynamics. To mitigate these risks, the Company continues to diversify its client base across government and private sectors, strengthen its technology-driven recruitment and workforce management platforms, enhance compliance mechanisms and invest in employee development and digital capabilities.
The Company periodically reviews its risk management practices to address emerging business challenges and changing market conditions. Through continuous monitoring, robust internal controls and prudent governance practices, Happy Square remains committed to managing risks proactively while capitalising on opportunities arising from the growing demand for organised HR outsourcing and workforce solutions.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:
The Company has in place proper system of internal control which is commensurate with size and nature of business. The Company has an Audit Committee headed by the Independent Director, inter-alia, to oversee companys reporting process, disclosure of information.
CAUTIONARY STATEMENT
Statements made in this Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations, outlook or predictions may constitute "forward-looking statements" within the meaning of applicable laws and regulations. These statements are based on certain assumptions and expectations of future events and involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to differ materially from those expressed or implied in such statements.
Important factors that could influence the Companys operations include changes in economic conditions, government policies and regulations, labour laws, competitive intensity, technology developments, availability of skilled manpower, customer demand, inflation, interest rates, geopolitical developments and other macroeconomic factors beyond the Companys control.
The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Readers are advised not to place undue reliance on these forward-looking statements and are encouraged to evaluate them in conjunction with the risks and uncertainties discussed elsewhere in this Annual Report.
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