Quess Corp Ltd Management Discussions

Management Discussion and Analysis

Macroeconomic and Industry Environment Global Economy

The global economy demonstrated a measured resilience throughout 2025, although growth remains below historical averages. According to the IMF, global GDP growth is estimated at 3.2% for 2025 and is expected to hold steady at the same rate through 2026. This stability, however, masks a significant divergence between regions. While advanced economies are growing at a modest pace of roughly 1.7%, emerging markets and developing economies continue to be the primary growth engines, projected to expand by 4.2%. While global inflation is on a downward path, projected to ease from 5.9% in 2025 to 4.5% in 2026, it remains above pre-pandemic levels. This has prompted major central banks to maintain a cautious monetary stance, which has, in turn, tempered the recovery of global investment cycles.

The global outlook is tempered by several downside risks that could disrupt the current stability. On the external front, persistent geopolitical tensions—particularly the ongoing volatility in West Asia—remain a primary concern, as any escalation could trigger a spike in crude oil prices and disrupt critical shipping routes. This risk is compounded by geoeconomic fragmentation and increasing trade restrictions, which threaten to dampen global trade momentum and capital flows.

The global labor market is undergoing a structural shift driven by the dual forces of AI integration and the green energy transition. While technology is projected to be a net creator of approximately 78 million jobs by 2030, the shelf life of professional skills is shrinking rapidly, with nearly 40% of core competencies expected to be disrupted within the next four years. This structural churn has moved beyond automating entry-level tasks to augmenting mid-career professional roles through agentic workflows.

Indian Economy

India continued to demonstrate strong economic momentum through FY26, maintaining its position as the fastest-growing major economy. According to the second estimates released by the Ministry of Statistics and Programme Implementation (MoSPI), real GDP growth for FY26 is projected at around 7.6%, improving from 7.1% in FY25. Growth was supported by resilient domestic demand, steady government capital expenditure, and continued expansion in services and manufacturing.

Economic activity remained broad-based during the year. The services sector, which accounts for more than half of Indias GDP, continued to be the primary growth driver, expanding by around 7.5-7.8% during FY26. Growth was supported by sustained demand across IT and business services, financial services, logistics, travel, and hospitality.

The manufacturing sector also recorded improved performance, growing by double digit, supported by stronger domestic demand, higher capacity utilisation, and policy initiatives aimed at strengthening domestic production and supply chain resilience.

Inflation remained largely within the Reserve Bank of Indias tolerance band, supporting consumption and investment sentiment. Core inflation remained steady at around 4% in FY26, down from higher levels in the previous year, while headline inflation declined sharply during the year.

Indias labour market indicators showed gradual improvement during the year. Labour force participation increased modestly, supported by rising workforce participation among women and continued job creation in services, construction, and manufacturing. The unemployment rate remained broadly stable at around 5%, while employment absorption improved across both formal and informal segments of the economy. The ongoing streamlining of the legislative framework through the simplification of labor codes is expected to enhance operational flexibility and promote formal employment.

Outlook

While external risks regarding global growth, geopolitical volatility, and commodity price fluctuations persist, Indias outlook remains positive. The IMF projects Indias real GDP growth at around 6.5% for FY27, down from the higher FY26 base, keeping India the fastest-growing major economy. The economy is well-supported by a vast domestic market and the ongoing modernisation of both digital and physical infrastructure. These foundational strengths, coupled with sustained structural reforms, provide a resilient framework that balances external pressures. As a result, Indias strong internal fundamentals offer a high degree of growth visibility, positioning the economy to maintain its upward momentum despite a complex global environment.

Global Staffing Industry:

The global staffing industry has moved through a period of subdued demand rather than expansion. The global market, estimated by Staffing Industry Analysts (SIA) at roughly US$650 to 700 billion, has been broadly flat over the past two years, as elevated interest rates, cautious corporate hiring and macroeconomic uncertainty weighed on volumes across most developed markets. The World Employment Confederations labour market data shows the same pattern, with agency-work volumes flat to declining across major economies.

Region/Segment	Growth Trend (to 2030)	Key Drivers	Insight
North America	Moderate, 3-4% annually	IT, healthcare staffing demand	Stable, mature market
Europe	Steady, 4-5% annually	Labor mobility, industrial reskilling	Focus on compliance and regulation
Asia-Pacific	Rapid, 7-8% annually	Digital expansion, offshore outsourcing	Fastest-growing region

This evolution is also reshaping the staffing landscape beyond traditional recruitment into technology-enabled workforce solutions. AI-led talent sourcing, digital staffing platforms and skills-based hiring models are becoming increasingly mainstream, enabling faster and more efficient workforce deployment.

Demand for temporary and contract staffing continues to remain resilient globally, supported by supply chain realignments, reshoring initiatives and project-based employment requirements. Emerging markets, particularly India, are witnessing strong growth in flexi staffing, driven by formalisation of employment and rising workforce participation across manufacturing, BFSI and logistics sectors.

India Staffing Industry

India remains one ofthe largest and most structurally supported staffing markets globally, though growth moderated in FY26 in line with a cautious hiring environment.

• IT Flexi staffing is projected to grow faster than permanent hiring over the medium term.

• The formal flexi workforce tracked by industry bodies has already crossed 1.9 million associates in FY26, continuing a steady upward trajectory.

In the near term, FY26 has seen moderate but stable growth, with:

• Nearly 7.9% year-on-year expansion in general staffing

• Nearly 10.1% growth in IT flexi staffing despite temporary regulatory adjustments

Indias demographic structure remains a key long-term strength, with a large working-age population and expanding talent pools across Tier 2 and Tier 3 cities. Policy initiatives such as Make in India, the National Infrastructure Pipeline, Skill India, apprenticeship programmes, and the Employment Linked Incentive scheme are expected to further deepen the formal employment ecosystem.

General Flexi Staffing:

Within the Indian staffing landscape, general staffing remains the largest and most established segment. It serves as the backbone of organised workforce deployment, supporting high-volume hiring needs across sectors such as BFSI, retail, telecom, logistics, manufacturing, and infrastructure.

The nature of demand within general staffing is evolving. While traditional sectors such as BFSI and consumer businesses continue to contribute meaningfully, there is a visible shift toward manufacturing, industrial services, and infrastructure-led hiring. These sectors bring with them longer contract tenures, higher workforce intensity, and improved margin potential. At the same time, client expectations are becoming more sophisticated. Enterprises are increasingly seeking partners who can go beyond fulfilment to deliver:

• Workforce productivity and efficiency

• Skilling and training support

• Compliance assurance across geographies

• Technology-enabled workforce management

This transition is gradually redefining general staffing from a scale-driven business to a solution-oriented, capability- led service model. The conversation is shifting from scale to smart scale. In high-volume environments, AI is beginning to play a transformative role:

• Automated sourcing engines that identify candidates across multiple databases and geographies

• AI-driven screening tools that match candidates to roles based on skill, experience, and behavioural indicators

• Predictive analytics to forecast demand and optimise workforce deployment

• Attrition modelling to improve retention in large distributed workforces

The result is a redefinition of general staffing, from a fulfilment- led model to a data-driven workforce optimisation engine.

IT Flexi Staffing:

Indias IT flexi staffing industry is witnessing a strong growth phase, supported by accelerating digital transformation, expanding Global Capability Centres (GCCs) and rising demand for specialised technology talent. This growth is being driven by a clear change in enterprise behaviour. IT Flexi staffing is no longer used only for seasonal or temporary requirements. It is increasingly being integrated into core workforce planning as companies seek to balance:

• Cost efficiency in a dynamic demand environment

• Faster hiring cycles and scalability

• Reduced regulatory and compliance risk

• Operational agility across business cycles

• Enterprises are increasingly adopting flexible workforce models to access niche capabilities across artificial intelligence, cloud engineering, cybersecurity, data analytics and platform engineering.

The industry has also demonstrated visible hiring momentum during FY26. According to industry reports, IT flexi staffing employment recorded a 10.1% year-on-year growth in FY26, reflecting improving demand conditions across GCCs, technology firms and digital services businesses. Indias IT flexi staffing market is expected to maintain a healthy long-term growth trajectory, supported by continued GCC expansion, increasing enterprise technology spending and wider adoption of AI-enabled business models.

Why GCCs are strategic opportunity:

India GCC Ecosystem Indicators	Industry Position
GCC Revenue (FY26)	Approximately US$64.6 billion
Number of GCCs in India	2,100+ centres
GCC Workforce Base	Approximately 2.36 million employees
Share of New IT Hiring from GCCs & Tier-2 Firms	Around 73%

1. GCCs are increasingly using flexible and contractual hiring models to access specialised talent, manage project cycles, and maintain operating agility. Contractual roles are expected to account for nearly one in four GCC roles by 2026, compared with 18% in 2024.

2. New Job Creation: GCC employment is projected to generate 4.25-4.5 lakh new jobs in CY2025 alone, across technology, BFSI, manufacturing and healthcare (NLB Services report).

3. AI Talent Surge: 58% of Indian GCCs are already investing in Agentic AI, and 83% are scaling Generative AI projects (EY GCC Pulse Survey 2025). AI demand is projected to cross 1 million AI-related roles in GCCs by 2026, from 120,000 professionals today.

4. Real Estate Demand: GCCs accounted for approximately 40% of Indias total Grade-A office space demand in 2025, leasing over 28 million sq. ft. — reflecting the sectors rapid physical expansion.

5. Economic Contribution: GCCs contribute approximately 2% of Indias GDP and approximately 4% of services sector GDP. Their revenue from India operations is estimated at USD 64.6 billion annually.

Demand is also becoming more concentrated and predictable. Nearly 38% of IT flexi staffing demand is expected to come from logistics, BFSI, and manufacturing, while leading economic states such as Maharashtra, Karnataka, Tamil Nadu, Telangana, and Uttar Pradesh account for a significant share of workforce deployment. In effect, IT flexi staffing is transitioning from an optional lever to a foundational workforce model.

For Quess, this creates a strong opportunity to deepen its professional staffing offerings, particularly in niche technology hiring, project-based deployment, and integrated workforce solutions for global enterprises establishing or scaling India capability centres.

Market Opportunities:

The Indian staffing industry today sits at the intersection of multiple reinforcing trends.

1. AI and Automation: Disruption and Opportunity

Artificial intelligence is reshaping the staffing industry at

two levels:

(a) AI as a hiring and matching tool for staffing companies themselves; and

(b) AI-driven automation displacing certain categories of contractual work while creating new, higher-value categories.

This creates substantial demand for AI upskilling, AI governance roles (AI Ethics Lead, MLOps engineers, GenAI Product Owners), and replacement of automated roles with higher-value human oversight. For staffing companies, AI tools are enhancing candidate matching speed, reducing time-to-deploy, and improving fulfilment rates-Quess has flagged AI-led initiatives in Professional Staffing to enhance productivity and associate experience.

2. Labour Codes - A Structural Opportunity

The implementation of the four Labour Codes during FY26 marked one of the most significant regulatory developments for Indias employment ecosystem. The Codes consolidate 29 legacy labour laws into a more unified framework covering wages, social security, industrial relations, and occupational safety.

SBI Research estimates that the implementation of the Labour Codes could reduce unemployment by up to 1.3% and generate approximately 7.7 million additional jobs. Workforce formalisation is projected to rise from 60.4% to 75.5%-an increase of approximately 15 percentage points. Social security coverage is expected to expand to 85% of workers within 2-3 years

For Quess Corp, this regulatory shift is structurally positive. The Companys scale, compliance infrastructure, digital systems, and experience in managing large associate workforces position it well to benefit from the formalisation trend.

3. Government Employment Initiatives:

Schemes such as the Employment Linked Incentive (ELI)/ Pradhan Mantri Viksit Bharat Rozgar Yojana (PMVBRY) programme are expected to support formal employment generation and improve the competitiveness of organised staffing models over informal workforce structures

4. Diversification of demand across sectors:

The nature of demand is evolving. Earlier, staffing growth was largely anchored in a few sectors such as BFSI, retail, and telecom. Today, demand is far more diversified. Manufacturing, logistics, infrastructure, healthcare, and e-commerce are emerging as significant contributors. This shift is important because it brings in longer engagement cycles, higher workforce intensity, and more stable demand patterns. It also changes the expectations from staffing providers, from simply supplying manpower to managing productivity across complex operational environments.

5. The rise of Global Capability Centres (GCCs) and digital transformation is creating parallel demand for both skilled and support workforce categories, further deepening the staffing opportunity.

6. The emergence of gig and hybrid workforce models:

Enterprises are no longer relying on a single category of employment. Instead, they are building blended workforces that combine permanent employees, flexi staff, and gig workers. This approach allows organisations to optimise cost structures while maintaining operational flexibility. However, it also introduces complexity, managing different categories of workers across multiple systems and compliance frameworks. This complexity is driving demand for integrated staffing solutions.

7. Platformisation of staffing services

Digital platforms are enabling end-to-end management of the workforce, from onboarding and attendance to payroll and compliance. These platforms bring transparency, improve control, and allow real-time decision-making. For clients, this translates into better visibility. For staffing companies, it enables scale without a proportional increase in operational complexity.

Threats & Risks:

1. Insourcing by Clients: Simplified labour regulations and formal employment incentives may encourage certain clients to directly onboard employees instead of outsourcing workforce requirements, particularly in large-scale staffing categories.

2. Macroeconomic and Geopolitical Uncertainty: Global economic volatility, trade tensions, inflationary pressures, and geopolitical developments may impact enterprise hiring sentiment, GCC expansion, and overall workforce demand across sectors and geographies.

3. Competitive Intensity and Pricing Pressure: The staffing industry remains highly competitive, particularly within General Staffing, which may impact pricing power, margin sustainability, and client retention.

4. Overseas Regulatory Challenges:

Regulatory developments such as Singapores COMPASS framework and localisation policies in Middle Eastern markets may impact workforce deployment models and increase operational complexity.

Outlook:

The industry is steadily evolving from a volume-driven, execution-focused model into a capability-led and technology-enabled workforce ecosystem. While scale and reach will remain important, the basis of competition is increasingly shifting toward intelligence, integration and the ability to deliver measurable business outcomes. Organisations are moving beyond conventional hiring approaches and adopting workforce strategies that prioritise agility, specialised skill access, faster deployment and operational flexibility.

As workforce models continue to evolve, staffing companies with strong technology capabilities, domain expertise and integrated service offerings are expected to be better positioned to capture long-term growth opportunities.

Overseas Markets

Quess overseas markets continue to present selective growth opportunities.

Cross-border talent mobility remains an important long-term theme. Global demand for Indian professionals in healthcare, technology, engineering, and advanced manufacturing is expected to create opportunities for organised staffing companies capable of managing compliant international placements.

The Middle East remains supported by infrastructure investment across Saudi Arabia, the UAE, and Qatar, creating demand for both general and specialist staffing.

Malaysia and the Philippines continue to benefit from expanding services sectors and digital economy growth.

Singapore remains strategically important, although the COMPASS framework has tightened foreign work pass approvals, particularly affecting certain IT staffing models. This requires a sharper focus on general staffing, permanent hiring, and locally relevant workforce solutions.

Corporate Overview

Quess Corp is Indias leading workforce management company and one of the largest integrated staffing and employment solutions platforms in the region. Headquartered in Bengaluru, the Company operates at the intersection of employment generation, workforce formalisation, compliance management, and technology-enabled human capital solutions.

Following the completion of its demerger in FY25, the Company now operates as a focused pure-play Workforce Management enterprise, enabling sharper strategic alignment, greater operating focus, and stronger capital allocation discipline. The streamlined structure positions Quess to deepen its leadership across staffing, professional workforce solutions, overseas recruitment, and workforce technology platforms.

Today, the Company manages a workforce of approximately 480,000 employees across eight countries and serves over 2,200 clients globally. Its diversified client base spans sectors including manufacturing, retail, BFSI, telecom, healthcare, logistics, e-commerce, technology, infrastructure, and Global Capability Centres (GCCs).

Quess Corp operates a diversified workforce management platform through General Staffing, Professional Staffing, Overseas Staffing, and Digital Platforms.

General Staffing

The General Staffing business provides large-scale workforce deployment and management solutions across industries. Its offerings include flexi staffing, payroll and compliance management, apprenticeship solutions, gig workforce management, and workforce lifecycle services. The segment continues to benefit from formalisation of employment, manufacturing growth, infrastructure investments, and rising demand for organised staffing solutions.

Professional Staffing

The Professional Staffing segment focuses on specialised and knowledge-led workforce solutions across Digital & Technology Skills, GCC Services, Recruitment Services, and International Mobility solutions.

The segment supports enterprises and Global Capability Centres with niche talent acquisition, project staffing, contractual hiring, and specialist recruitment across high- growth technology domains including AI, cloud, analytics, cybersecurity, and digital engineering.

Overseas Business

The Overseas Business segment provides international staffing and workforce mobility solutions across APAC markets including Singapore, Malaysia, Philippines, Vietnam, and Sri Lanka, as well as the Middle East.

The business supports global demand for Indian talent across sectors such as engineering, healthcare, infrastructure, construction, hospitality, and services through compliant sourcing, deployment, and workforce management solutions.

Digital Platforms and Workforce Technology

Technology remains integral to Quesss operating model. The Company has built proprietary platforms covering sourcing, onboarding, payroll, compliance, associate engagement, workforce analytics, and Al-enabled recruiter productivity tools. Key offerings include Blue-Collar Job & HRMS platforms and on-demand gig workforce platforms.

These platforms strengthen Quesss digital workforce ecosystem by enhancing sourcing efficiency, workforce engagement, payroll management, compliance monitoring, and scalable workforce deployment capabilities.

Financial Performance Discussion FY26 Financial Highlights

Adjusted EPS and adjusted PAT exclude one-time exceptional items, specifically costs related to the labour code impact and demerger.

During FY26, Quess Corp delivered a resilient financial performance despite a challenging macroeconomic environment marked by geopolitical uncertainty, evolving trade dynamics, and changing workforce demand patterns. The Company continued to focus on profitable growth, operational efficiency, margin expansion, and strengthening the quality of earnings across businesses.

• The Company reported revenue of Rs.153,052 million for FY26, reflecting steady growth over the previous year.

• EBITDA for the year stood at Rs.3,124 million, registering a strong 19% year-on-year increase, supported by improved operating leverage, stronger contribution from high margin businesses, and disciplined cost management.

• Adjusted Profit After Tax (PAT) stood at Rs.2,302 million, while Return on Equity (ROE) delivered at approximately 20%.

• The Company also maintained a strong balance sheet with a net cash position of Rs.2,706 million.

Segment Performance FY26 Financial Highlights

General Staffing

• Revenue for FY26 stood at approximately Rs.131,757 million, contributing nearly 86% of the Companys consolidated revenue.

• The segment managed an associate headcount of approximately 4,65,576 employees, accounting for 97.3% of the total workforce base.

• Segment operating margin stood at approximately Rs.1,885 million.

• Improved customer quality with a higher share of Collect & Pay business.

• The business expanded its presence across Manufacturing, Construction, Defence, BFSI, Healthcare, Consumer, Retail & Telecom (CRT), Logistics and other infrastructure-linked sectors, while adding several new enterprise clients during the year.

• Growth continued to be driven by increasing formalisation of the workforce, rising adoption of flexible staffing models, expansion of the gig workforce and sustained demand for compliant workforce solutions across both established and emerging industry verticals.

Professional Staffing

• Revenue for FY26 stood at approximately Rs.9,299 million, contributing around 6% of consolidated revenue and 13% YoY growth.

• The segment managed a workforce base of approximately 7,066 associates.

• Segment operating margin stood at approximately Rs.1,106 million (+44% YoY growth), reflecting strong profitability and an improved margin profile, with PS contributing ~30% of the total profitability. Demand remained robust across Digital & Technology Skills, GCC Services, Recruitment Services, and International Mobility.

• Continued strong momentum in specialised staffing, supported by increasing demand for digital and technology talent.

• Demand remained robust across Digital & Technology Skills, Global Capability Centre (GCC) Services, Recruitment Services, International Mobility, Consulting and Enterprise Staffing, supported by enterprises continued investments in digital transformation and specialised talent.

• The business further expanded its engagement with Global Capability Centres (GCCs), added several new enterprise clients during the year and witnessed a growing contribution from GCC customers, strengthening its position in one of Indias fastest-growing workforce segments.

• Continued momentum in specialised staffing, particularly for digital and technology talent, combined with disciplined execution and an improving client mix, further enhanced the segments profitability and strategic importance within the Companys portfolio.

Overseas Business

• Revenue for FY26 stood at approximately Rs.11,973 million, contributing nearly 8% of consolidated revenue.

• The segment managed approximately 5,777 associates across international markets.

• Segment operating margin stood at approximately Rs.765 million (21% YoY), contributing 20% to the overall profitability

• Middle East delivers margins of 11% during FY26 with YoY growth of Revenue and EBITDA at 27% and 40% respectively

• Singapore scales GS business with 68 new contracts and adding 491 HC during FY with overall HC at 1026 at exit.

• Performance was supported by steady demand across infrastructure, engineering, services, and healthcare- related workforce requirements.

Investments - Digital Platforms

• The Company continued to strengthen investments in digital workforce platforms and technology-led solutions during FY26.

• Key focus areas included Blue-Collar Job & HRMS platforms and on-demand gig workforce platforms.

• Investments remained directed toward AI-enabled recruiter productivity tools, workforce analytics, compliance automation, payroll digitisation, and associate engagement platforms.

Profit and Loss Account Summary

Component	FY26	FY25	YoY Change
Revenue	1,53,052	1,49,672	2%
EBITDA	3,124	2,623	19%
EBITDA Margin (%)	2.0%	1.8%	29bps
Depreciation & Amortisation	418	412	2%
Interest	492	386	28%
Other Income	165	236	(30%)
Exceptional items	-81	-1,643	-
Profit Before Tax (PBT)	2,297	418	450%
Tax	76	-41	(286%)
PAT	2,221	459	384%
PAT Margin %	1.5%	0.3%	114bps
Reported EPS (in Rs. INR)	14.8	3.1	377%
Adjusted PAT	2,302	2,102	10%
Adj. PAT Margin %	1.5%	1.4%	10bps
Adjusted EPS (in Rs. INR)	15.4	14.1	9%

Balance Sheet Summary

			Rs. (million)
Component	FY26	FY25	YoY Change
Total Assets	30,391	28,118	8%
Non-Current Assets	10,389	9,156	13%
Current Assets	20,002	18,962	5%
Cash & Cash Equivalents	1,781	2,491	(28%)
Trade Receivable (Billed + Unbilled)	15,822	15,295	3%
Total Equity	11,682	10,860	8%
Non-Current liabilities	4,232	3,153	34%
Current liabilities	14,477	14,106	3%
Gross Debt	-	121	(100%)
Total Liabilities	30,391	28,118	8%
Net Cash Position	2,706	2,610	4%
DSO (Days)	38	37	1%

Cash Flow Metrics

		Rs. (million)
Component	FY26	FY25
Interest Coverage Ratio	6.35x	6.8x
Current Ratio (times)	1.38x	1.34x
Debt-Equity Ratio (times)	0x	0.01x
EBITDA Margin	2.0%	1.8%
Net Profit Margin	1.5%	0.3%
Adjusted Net Profit Margin	1.5%	1.4%
Return on Net Worth (Adj. ROE)	20%	19%
Debtor Turnover Ratio	18.5	18.2
Working Capital Turnover Ratio	29.5	33.4
EBITDA to Operating Cash flow	81%	151%
Net Cash Position	2,706	2,610

Liquidity & Capital Allocation (Dividend/Buyback)

Effective from Financial Year 2026, the Company expects to return up to 75% of free cash flow to shareholders in the form of interim and/or final dividend and/or share buy-back over a block of 3 (three) years cumulatively. The Dividend Distribution Policy is available on the website of the Company and can be accessed at https://www.quesscorp.com/wp- content/ uploads/2026/05 /Dividend_Distribution_Policy.pdf.

For the FY26, the Company declared an interim dividend of 5 per share, a special dividend of 3 per share, and proposed a final dividend of 3 per share, taking the total dividend to 11 per share. This reflects the Companys strong cash generation, disciplined capital allocation and continued commitment to creating long-term shareholder value while retaining flexibility to fund future growth.

Quess Dividend History

Sl. No.	Financial Year	Type of Dividend	Dividend per Share	% of Dividend	Total Dividend For the Financial Year	% of Dividend for the Financial Year
1	2020-21	Interim Dividend	7	70%	7	70%
2	2021-22	Interim Dividend	4	40%	4	40%
3		Interim Dividend	4	40%
	2022-23	Interim Dividend	8	80%	12	120%
4	2023-24	Interim Dividend	4	40%	10	100%
		Final Dividend	6	60%
5	2024-25	Interim Dividend	4	40%	10	100%
		Final Dividend	6	60%
6		Interim Dividend	5	50%
	2025-26	Special Dividend	3	30%	11	110%
		Final Interim Dividend*	3	30%
		Total	54		54	54

Subject to the approval of the shareholders at the ensuing 19th AGM

Material Developments Affecting Going Concern

The Board and Management confirm that there were no material changes or circumstances during FY26 that adversely affected the Companys ability to continue as a going concern. The following developments are relevant in the context of the Companys operating environment and future readiness:

Post-Demerger Structure

The demerger completed in FY25 marked a significant strategic milestone for the Company. Following the restructuring, Quess Corp now operates as a focused Workforce Management company, while Digitide Solutions and Bluspring Services function as independent listed entities.

The simplified structure has enabled sharper strategic focus, improved operational alignment, and greater management attention on core workforce solutions businesses. The demerger has not had any adverse impact apart from the onetime demerger cost on the Companys operational continuity, customer relationships, or financial stability.

Labour Code Implementation

The notification and enforcement of the Labour Codes with effect from November 21, 2025, marked one of the most significant regulatory reforms affecting the staffing industry in recent years. The new framework consolidated numerous legacy labour laws into a unified compliance regime covering wages, industrial relations, social security, and occupational safety, health and working conditions.

Following the notification of the Labour Codes, the Company undertook a comprehensive assessment of the operational, financial, and compliance implications across its business segments. To ensure full preparedness under the revised regulatory framework, the Company implemented the necessary process, technology, and governance enhancements. While certain one-time implementation and compliance-related costs were incurred during the FY26, the Company believes that the new regime is structurally favourable for large, organised, and compliant staffing companies with robust digital compliance capabilities and strong governance practices.

Accordingly, the implementation of the Labour Codes pursuant to the aforesaid notification does not give rise to any material uncertainty or going concern risk for the Company. On the contrary, the Company expects the new regulatory framework to further drive formalisation within the staffing industry and strengthen the long-term growth prospects of organised market participants.

Financial Position

The Company maintained a strong financial position during FY26, supported by healthy operating cash flows, disciplined working capital management, and balance sheet profile with net cash of Rs.2,706 million.

Post demerger, the Company continues to maintain a healthy net cash position with negligible gross debt exposure. The business also sustained focus on receivables management and operational efficiency, resulting in continued discipline in working capital metrics, currently with average DSO at 38 days.

The Company continued its shareholder return approach through healthy dividend payouts aligned with its stated capital allocation policy of returning up to 75% of free cash flow over a block of 3 (three) years cumulatively.

Macroeconomic Context

The global economic environment during FY26 remained characterised by elevated uncertainty arising from geopolitical tensions, trade policy shifts, inflationary pressures, and tighter financial conditions across several developed markets.

Despite this backdrop, the Indian economy remained relatively resilient, supported by infrastructure spending, domestic consumption, manufacturing activity, and ongoing formalisation of employment. These structural strengths continue to support long-term workforce demand across multiple sectors.

Additionally, the Companys diversified business mix across staffing segments, geographies, industries, and client categories provides resilience against concentration risks and sector-specific slowdowns.

Leadership and Governance

The Company continued to strengthen its leadership and governance framework during the year. Mr. Lohit Bhatia, previously President - India and Global Operations, was elevated to the role of Chief Executive Officer (CEO) of the Company w.e.f. January 01, 2026, bringing extensive industry experience and further strengthening the Companys leadership and strategic direction. In parallel, Mr. Guruprasad Srinivasan transitioned from the role of Executive Director & Group CEO to Executive Director of the Company, effective the same date. Subsequently, w.e.f. June 01, 2026, Mr. Lohit Bhatia was re-designated and appointed as the Executive Director and Group CEO of the Company.

Mr. Neeraj Jain was appointed as the Chief Financial Officer of the Company w.e.f. December 05, 2025, enhancing the depth of the senior leadership team and further strengthening governance oversight.

The Board, internal audit mechanisms, risk management systems, and compliance processes continued to function effectively throughout the year. There were no material lapses in governance, internal financial controls, or regulatory compliance that could impact the Companys operational continuity.

Going Concern Confirmation

Based on the Companys financial position, operating performance, cash generation profile, diversified business model, governance framework, and overall assessment of foreseeable risks, the Board is satisfied that the Company has adequate resources to continue its operations for the foreseeable future.

Accordingly, the financial statements for FY26 have been prepared on a going concern basis.

Outlook

The demerger has left Quess as a focused, well- capitalised workforce solutions company with a clear runway for profitable growth. Our strategy runs across two complementary chapters: deepening the businesses we already lead, which we think of as Quess 1.0, and building the next margin-accretive, technology & global talent corridor engines of growth, Quess 2.0.

Quess 1.0: volume, layered with value

We hold a position of disproportionate leadership in our core businesses, General Staffing, Professional Staffing and Overseas Business, measured in revenue, headcount, client relationships and, increasingly, margin. We will continue to double down here, running a volume play and a value play concurrently:

In General Staffing, we will keep growing volume while layering higher-value services on top: expanding Value-Added Services, tilting the mix toward higher-margin sectors such as Construction and manufacturing, and pursuing selective inorganic opportunities.

In Professional Staffing and Overseas Business, growth will be led by Global Capability Centres and rising international sales, deeper global clients engagements, expansion across specialised segments, and building recognised practice leadership.

Quess 2.0: Technology and global talent corridors

The next phase is anchored in two structural shifts. The first is a sharper focus on margins, powered by technology and AI. The platforms we have built over nearly two decades are now maturing, and we are layering AI across the workforce lifecycle through a structured programme of identified use cases, aimed squarely at productivity, cost efficiency and margin improvement.

The second is international talent corridors. Indias deep and credentialised talent base positions us to build twoway, partner-led and capital-light corridors that connect Indian talent with global demand, while pulling inbound GCC and offshore delivery work into our professional staffing business. We are building and evaluating corridors across Japan, Europe, Israel and North America, focused on five talent segments where India has genuine depth and the world faces structural shortages: healthcare, technology, MEP and civil, hospitality and allied services, and finance and professional roles.

The road ahead will require agility, but the larger opportunity remains intact. Enterprises will continue to need compliant, scalable and technology-enabled workforce partners, and Indian talent will remain central to meeting global demand. Quess scale, digital infrastructure, sectoral reach and compliance-led operating model position us well to capture this opportunity while continuing to expand margins and returns

Technology, Innovation and AI

Technology is transforming the staffing industry at every stage of the employment lifecycle. AI adoption among staffing firms has increased meaningfully, with use cases spanning candidate engagement, resume parsing, automated matching, workflow automation, compliance monitoring, and recruiter productivity.

Quess has built a proprietary digital platform covering sourcing, onboarding, payroll, compliance, associate engagement, and workforce analytics. During FY26, the Company advanced several technology initiatives, including AI-powered recruiter productivity tools for high-volume staffing workflows, AI-assisted sourcing and matching tools in professional staffing, and upgrades to its core HRMS platform.

The Companys jobs platform is integrated with ONDC, enabling wider distribution ofjob listings across state portals and citizen applications. Its proprietary HRMS platform supports payroll and compliance for more than 480,000 associates and is being evaluated for commercialisation to mid-market enterprise clients.

The Company also enhanced its gig and hyperlocal workforce platform with Direct Benefit Transfer capabilities, enabling compliant payout management for brand partners. The Bengaluru Global Shared Services facility further strengthens Quess centralised technology and operations capability.

Quesss technology strategy is built around human-AI collaboration. AI will increasingly handle process-intensive tasks, while human teams will continue to manage relationships, judgment-led decisions, client advisory, and workforce engagement. Over time, internal platforms may evolve into market-facing commercial products, creating new revenue streams beyond traditional staffing.

Risks and Mitigation

Quess Corp recognises risk management as an integral part of its business strategy, governance framework, and long-term value creation approach. The Company follows a structured Enterprise Risk Management (ERM) framework designed to proactively identify, assess, monitor, and mitigate risks arising from strategic, operational, financial, compliance, cyber security, Environmental, Social, and Governance (ESG), and business continuity-related factors.

The Companys risk management framework is aligned with globally recognised COSO and ISO 31000 principles and is embedded across business operations through defined policies, standard operating procedures, internal controls, and governance mechanisms. The framework supports informed decision-making, operational resilience, regulatory compliance, and sustainable business growth.

Oversight of enterprise risks is carried out through the Risk Management & ESG Committee of the Board, supported by senior management, Internal Audit, and designated risk owners across functions. The Company continues to strengthen its risk culture through continuous monitoring, periodic risk reviews, mitigation tracking, and transparent reporting mechanisms.

Risk Area	Risk Description	Mitigation Measures
Macroeconomic and Demand Cyclicality Risk ?DdO	The staffing and workforce management industry remains sensitive to economic cycles, business sentiment, hiring trends, and sector-specific demand fluctuations. Slowdowns in manufacturing, retail, IT services, BFSI, logistics, or global trade can impact workforce deployment and hiring demand.	The Company maintains a diversified portfolio across sectors, workforce categories, and geographies, reducing dependence on any single industry or client segment. Strong presence across high-growth sectors such as manufacturing, GCCs, logistics, healthcare, retail, and infrastructure provides balanced growth opportunities. The asset-light business model and technology-enabled operating structure support operational flexibility and faster response to changing market conditions.
Regulatory and Compliance Risk	The workforce management business operates within a highly regulated environment involving labour laws, wage regulations, social security compliance, taxation frameworks, and immigration policies across multiple jurisdictions. Regulatory changes could impact operating models and compliance costs.	The Company has implemented robust compliance management systems supported by digital workflows, automated payroll platforms, standard operating procedures, and dedicated compliance teams. Continuous monitoring of regulatory developments, strong governance oversight, and technology-enabled compliance tracking mechanisms help ensure adherence to applicable laws and regulations.
Talent Availability and Attrition Risk	The Companys growth depends on its ability to attract, deploy, engage, and retain skilled workforce across blue- collar, grey-collar, professional, and gig workforce categories. Higher attrition levels and competition for skilled talent may impact operational efficiency and service delivery.	The Company continues to strengthen its talent sourcing ecosystem through AI-enabled recruitment platforms, digital onboarding systems, skilling initiatives, and extensive sourcing reach across Tier 2 and Tier 3 markets. Proprietary platforms such as Hamara Jobs and Hamara HR support scalable hiring and associate engagement. Continuous investments in training, wellness initiatives, and leadership development further strengthen workforce retention and productivity.
Technology and Cybersecurity Risk ML— tb	Increasing digitisation exposes the Company to cybersecurity threats, technology disruptions, data privacy risks, and system vulnerabilities. As digital platforms and AI-enabled workflows scale further, maintaining secure and uninterrupted operations remains critical.	The Company continues to invest in strengthening its IT infrastructure, cybersecurity frameworks, access controls, cloud-based systems, and data protection mechanisms. Periodic security assessments, business continuity protocols, and controlled digital environments help safeguard operational integrity and sensitive stakeholder data.
Client Concentration and Competitive Intensity Risk	The staffing industry remains highly competitive, with increasing pricing pressure, evolving service expectations, and technology-led disruption. Loss of key clients or sustained pricing pressure may impact profitability and market positioning.	Quess continues to strengthen client relationships through integrated workforce solutions, value-added services, digital capabilities, and operational scale. A diversified client base across industries, long-standing customer relationships, and focus on higher-value offerings such as GCC staffing, managed services, and AI-enabled workforce solutions support business resilience and differentiation.
Overseas Business and Geopolitical Risk	Overseas staffing operations expose the Company to geopolitical developments, local regulatory changes, visa restrictions, currency fluctuations, and region-specific labour market risks across APAC and Middle Eastern markets.	The Company follows a geographically diversified approach across multiple international markets and sectors. It continuously evaluates country-specific regulatory environments, maintains local operational expertise, and adopts flexible deployment strategies to mitigate international business risks. Integrated mobility solutions and compliance-led execution further support operational stability.
Digital Platform Adoption Risk y	As the Company expands its digital ecosystem, sustained adoption and engagement across associates, gig workers, and enterprise clients remain critical for platform scalability and monetisation.	Quess continues to invest in user-centric digital platforms, AI-enabled sourcing engines, mobile-first interfaces, and integrated workforce management solutions. Platforms such as Hamara HR, Hamara Jobs, and TaskMo support stronger workforce engagement, operational visibility, and scalable service delivery across locations.
Operational Execution Risk	Managing a workforce base of significant scale across geographies, sectors, and client locations involves risks related to deployment efficiency, service quality, productivity, and execution consistency.	The Company leverages technology-led workforce management systems, AI-enabled automation, standardised operating procedures, and real-time monitoring tools to improve operational efficiency and execution quality. Its extensive sourcing network, digital infrastructure, and vertical-led operating model support scalable and agile operations.
Reputation and ESG Risk A	As a large workforce management organisation, any gaps in employee welfare, compliance, ethical practices, or stakeholder engagement could adversely impact brand reputation and stakeholder trust.	The Company continues to strengthen governance frameworks, ESG initiatives, employee wellbeing programmes, diversity and inclusion practices, and community engagement initiatives. Strong internal controls, ethical business practices, and continuous stakeholder engagement remain central to the Companys long-term sustainability approach.

Environmental, Social and Governance (ESG)

At Quess Corp, ESG is embedded into the Companys approach toward responsible growth, workforce formalisation, and long-term stakeholder value creation. As one of Indias largest private sector employers, the Company believes that economic progress, social development, environmental responsibility, and ethical governance are closely linked to sustainable business performance.

The Companys ESG philosophy is guided by the belief that "Whats good for society is good for Quess" and is anchored around four strategic pillars:

• The People Company

• Responsible Citizen

• Environmentally Conscious

• Trusted Institution

Environmental

The Company continues to focus on environmentally responsible operations through digitisation, resource optimisation, and responsible waste management practices.

Key initiatives include:

• Promotion of paperless operations through digital workflows, resulting in reduced paper consumption and a lower environmental footprint.

• Adoption ofresponsible resource and waste management practices, including segregation of paper and food waste, use of energy-efficient lighting fixtures, and adherence to municipal guidelines for water sourcing and disposal.

The increasing adoption of digital platforms and workforce technology solutions has also contributed toward reducing operational paper usage and improving process efficiency.

Social

As Indias largest private sector employer, Quess plays an important role in employment generation, workforce formalisation, and livelihood creation. The Companys business model supports the transition of workers into the formal economy while enabling access to social security and structured employment opportunities.

The Companys social priorities include:

• Mobilising talent and expanding access to formal employment

• Digital job discovery through platforms such as QJobs and Monster

• Vocational training, skilling, and employability enhancement

• Employee wellbeing, engagement, and career development

• Diversity and inclusion across workforce categories

• Community initiatives focused on education, health, sanitation, and wellbeing

Quess continues to support workforce skilling initiatives through partnerships and training centres across India. Through Careworks Foundation, the Company undertakes Corporate Social Responsibility (CSR) initiatives focused on quality education, healthcare, clean water, sanitation, and community development.

Governance

The Company remains committed to high standards of corporate governance, ethical conduct, transparency, and regulatory compliance.

Key governance focus areas include:

• Strong Board oversight and governance framework

• Robust compliance, internal control, and risk management systems

• Code of Conduct, Anti-Bribery and Anti-Corruption practices

• Whistle Blower mechanisms promoting transparency and accountability

• Information security and data privacy management

• Continuous strengthening of cyber security and compliance processes

The Companys governance framework is aligned with the Companies Act, 2013, the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI Listing Regulations) and other applicable laws, while continuing to benchmark itself against leading governance practices globally.

ESG Governance and Reporting

The Risk Management & ESG Committee oversee the Companys ESG strategy, implementation, and monitoring processes.

Quess continues to publish ESG-related disclosures through its Sustainability Report and Business Responsibility Report, while aligning its ESG priorities with relevant United Nations Sustainable Development Goals (UN SDGs).

Internal Controls and its adequacy

The Company has instituted a strong and structured Internal Control System (ICS), aligned with the requirements of the Companies Act, 2013, and calibrated to its business scale and complexity. These controls are embedded in operational workflows through well-defined policies and procedures approved by the Board, ensuring regulatory compliance, asset protection, transaction integrity, and accurate financial reporting.

The internal audit is carried out by M/s. Grant Thornton Bharat LLP, under the direction and oversight of the Audit Committee, to whom the Internal Auditor reports independently. Regular audits are conducted across business functions to assess control effectiveness and compliance with statutory and internal norms. Audit observations and action plans are reviewed by management and presented to the Audit Committee on a quarterly basis.

The Audit Committee, comprising 6 (six) directors (including four independent directors), closely monitors the implementation of recommendations and ensures the effectiveness of internal controls and risk management systems. In parallel, the statutory audit conducted by M/s. Deloitte Haskins and Sells LLP includes an evaluation of internal financial controls over financial reporting, in accordance with Section 143 of the Companies Act, 2013, and Environmental, Social, and Governance (ESG), Listing Regulations.

The Company continues to enhance its control environment by prioritising automated and preventive controls over manual processes. A robust ERP system and other digital platforms serve as the technological backbone of its internal controls, supporting real-time monitoring, process discipline, and data accuracy. These systems are continuously updated to address evolving business needs, strengthen governance, and reinforce financial integrity

Human Resource

The Company acknowledges the value of its human resource and follows a strong human resources driven approach with modern workplace values. The Company encourages a supportive work environment with defined and transparent HR process and evaluations.

The HR function highlights a well-structured and outcome- driven people strategy, with consistent "Great Place to Work" certifications across India (7th time), UAE (1st time), and Singapore (3rd time), indicating strong scalability of people practices across geographies. This is complemented by recognition in Leadership Factories of India for the second consecutive year, reflecting a strong leadership pipeline, along with continued focus on DEI and inclusion (CII recognition) and top workplace rankings in health & wellness for two consecutive years.

Employee engagement remains active and structured through initiatives like Quarterly Meethathon, Rewards & Recognition (127 awards in Q3 FY26), and "Ask Us Anything" forums, reinforcing open communication and a culture of recognition and collaboration across the organization.

On the learning front, the Company achieved its annual learning targets through initiatives such as the #52DaysTo52Hours challenge and Great Within, fostering a culture of continuous learning and capability development. These efforts translated into a marked improvement in managerial readiness, with badge eligibility increasing to 33% in FY26, compared with 9% in FY25 and 15% in FY24. Overall, HR efforts are clearly aligned towards strengthening engagement, leadership depth, and continuous learning to support long-term organizational growth.

The SANGAM 2025 Leadership and Performance Awards underscore Quesss strong performance-driven culture by recognizing outstanding contributions across levels. With 227 total nominations, 55 global awardees, and 5 Chairman Awards, the program reflects broad-based participation and a robust recognition framework. Additionally, long-service awards highlight employee loyalty, with 59 employees recognized (53 for 10 years and 6 for 15 years).

Aligned with the "Go Beyond" theme, these awards reinforce a culture of excellence, motivating employees to exceed expectations while strengthening engagement, retention, and high-performance behavior across the organization.

Cautionary Statement

The statements made in the Management Discussion and Analysis describing the Companys objectives, projections, estimates, and expectations may be ‘forward-looking statements within the meaning of applicable securities laws & regulations. Actual results could differ from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions affecting demand, supply, and price conditions in the domestic & overseas markets in which the Company operates, changes in Government regulations, tax laws & other statutes, and other incidental factors. The Company assumes no responsibility in respect of forward-looking statements, which may be amended or modified in the future.