Team Lease Services Ltd Management Discussions

Economic Overview Global Economy¹

In CY2025, the global economy expanded by 3.4%, reflecting resilience in an economic environment marked by uncertainty. Resilient private investment and favourable monetary policies supported growth across major economies. Emerging markets and developing economies continued to outperform advanced economies, expanding by 4.4% during the year. Global inflation remained benign despite divergence across regions.

The global economy and labour markets demonstrated resilience during the year, despite heightened policy uncertainty and persistent geopolitical tensions that weighed on investor sentiment. Demographic shifts across certain regions contribute to stabilisation in the labour force, despite moderate employment growth.

The global employment rate remained stable in CY 2025, with an estimation at 4.9%. However, the global jobs gap is projected at 408 million for CY 2026, highlighting the significant measure of labour underutilisation. Regional unemployment trends exhibit divergence, with Latin America

and the Caribbean nations projected to witness decline in unemployment rate while North America may witness a gradual loosening of the labour market conditions.

Outlook

The global economy is projected to grow at 3.1% in CY 2026, subject to downside risks from protracted geopolitical conflicts. EMDEs face an elevated risk of economic slowdown and rising inflationary pressures and supply chain constraints. AI-related investments and productivity gains can offset the impact of downside risks. As uncertainty subsides and trade structures realign themselves, the global economy can return to upcycle conditions.

Global employment is projected to grow at approximately 1% in CY 2026, backed by strong population growth and a significant influx of young workers entering the workforce in lower-middle-income countries. South Asia is expected to lead in labour productivity growth, with an estimated increase of 3.9% in CY 2026. However, sustained improvements in productivity across other low- income countries will be critical to ensuring the availability of quality employment opportunities for the expanding workforce in these countries.

Indian Economy

Against a turbulent economic backdrop, the Indian economy emerged as picture of macroeconomic stability, India was among the fastest growing major economies in the world-registering a 77% growth during the fiscal year. A favourable policy environment led to elevated domestic consumption and private investment.

Inflation reached historically low levels during the year as a result of subdued food prices. Further, the government introduced tax reforms, providing fresh impetus to demand across sectors. Financial conditions also eased during the year, as the RBI cut down interest rates by 100 basis points to 5.25%.

Employment conditions remained stable for most part of the year. Government initiatives including the Prime Ministers Employment Generation Programme (PMEGP), Pradhan Mantri Viksit Bharat Rozgar Yojana, Pradhan Mantri Kaushal Vikas Yojana (PMKVY), Start Up India, etc. continue to nurture employment in the country.

Increased capital outflows from the economy driven by external factors remains a key monitorable for the economy. Supply chain disruptions as a result of ongoing conflicts in the Middle East impacted energy costs in Q4FY26, building inflationary pressures.

Outlook

Indias economic outlook remains positive on the back of resilient investments. The capital expenditure in the Union Budget FY 2026-27 increased by 11.5%, accounting for TI2.22 lakh crore. With a favourable Rabi sowing season, a rebound in manufacturing and ongoing structural reforms, the economy is well positioned to counter external headwinds in the short-term.

India achieved an important milestone of concluding the India-European Union Free Trade Agreement in the beginning of 2026. The trade relations with the United States also witnessed a turning point as progress continues on signing a bilateral trade agreement, which will help lower tariffs considerably and laid down a mechanism for key imports. Additionally, the government of India also took steps toward mitigating the risks associated with energy imports by making appropriate changes in trade agreements with its partners.

Indias growing youth demographic with a median age of 28-29 years is expected to be key driver of this economic growth as unemployment remains subdued and the

working age population continues to grow steadily.

India Staffing Industry

Indias staffing industry in FY26 is characterised by rapid formalisation and a transition toward high-skill flexi-staffing business models. The growth momentum of the industry is supported by the expansion of Global Capability Centres (GCCs) and a resurgent manufacturing sector, with significant hiring activity expanding into Tier-2 and Tier-3 cities.

India witnessed notable improvements in its labour market during the financial year, driven by higher workforce participation and decline in youth unemployment. Policy reforms and targeted skill development initiatives further strengthened the employment landscape. The Union Budget 2025-26 emphasises vocational training through initiatives such as the Education to Employment and Enterprise Standing Committee, which aims to prioritise sectors critical to growth, employment generation and services exports.

India has emerged as a highly cost-effective destination for GCCs supported by a vast skilled talent pool, competitive

labour costs, a growing domestic market and accelerated urban infrastructure development. Collectively, these factors are expected to reinforce Indias position as a global service leader, with a projected 10% share of the global market by 2047.³

Employment Trends

Global employee perceptions of the job market improved in 2025

Wage Growth and inflationary Pressures

Despite inflationary pressures arising from energy supply shocks due to the Middle East conflict, global wage growth has outpaced inflation. Regional divergence is emerging as median wages growth in the Asia Pacific region nearly doubles Europe. Workers in advanced economies including the UK, some parts of Europe and the US.

Ai-induced Disruption

Artificial intelligence (AI) continues to reshape global labour markets, driving structural changes across industries. Organisations are undertaking workforce realignment initiatives, resulting in the displacement of certain traditional roles while simultaneously creating new opportunities in emerging domains.

While concerns persist regarding the potential impact of AI adoption on young workers, particularly those entering high- skilled occupations, the productivity gains enabled by AI are supporting increased investment and innovation.

A notable trend is the rapid transition of IT professionals towards AI-centric roles, supported by growing employer investment in specialised training and upskilling initiatives. This shift is expected to play a pivotal role in redefining workforce capabilities and aligning talent with evolving business requirements.

Demographic Shift

Countries are witnessing expansion in both population size and proportion of older people in the population. As the share of working age population shrinks, economies will face pressure to support older demographic who move out of the workforce leading to productivity decline.

Green Transformation

Despite recent adverse trends, green investments remains resilient. Notably, green hiring has consistently outpaced overall labour-market hiring trends in recent years.

Demographic Shift

The global economy is witnessing divergent demographic trends. High-income countries are experiencing ageing population and increasing dependency ratios, while lower-income countries are expected to benefit from the demographic dividend. India, along with Sub-Saharan Africa, is projected to supply nearly two-thirds of new workforce entrants in the coming years.⁵

Indias Flexi Staffing Industry⁶

Flexible staffing continues to play a key role in formal employment by providing structured jobs and social security benefits. Young professionals, particularly those aged 18-25, account for a significant share of new entrants.

Flexi hiring allows businesses to respond swiftly to evolving demand conditions and focus on core operations and reduce compliance burdens, while offering scalability and rapid access to talent.

The Indian flexi staffing industry is projected to grow by 12.6% over the next two financial years, reaching 9.6 million by FY27. E-commerce is emerging as the primary growth driver, alongside retail and hospitality sectors, which witnessed significant seasonal demand during the festive seasons. Gig economy in India is expanding at approximately 15% annually and is projected to employ 9 lakh workers by 2030.⁷

Growth in demand for specialised skills in AI, Cloud Computing and Cybersecurity continues to IT staffing as a key source of formal employment. Other industries, including Healthcare and Organised Retail, have also contributed to employment growth from this industry. Collectively, the manufacturing, logistics and BFSI (Banking, Financial Services and Insurance) sectors employ around 38% of the flexi workforce.

Approximately 7% of Indias current workforce is employed under the flexi staffing model.

The segment demonstrated improved performance during the year, supported by non-IT sectors and growth in Tier 2 cities and Tier 3 cities. These regions have emerged as key drivers, reflecting deeper formalisation of employment across the country.

Demand for high-value talent remained strong across sectors. White-collar hiring recorded a 9% year-on-year increase in March 2026, driven by demand in AI, machine learning and non-IT sectors.

IT flexi staffing industry

The IT flexi-staffing segment witnessed a strong recovery, led by Tier-2 technology companies and GCCs. The GCCs accounted for a significant share of employment, particularly in AI, Cloud Computing and Cybersecurity roles among others.

Hiring in AI/ML roles grew by 37% year-on-year, with southern metropolitan cities such as Chennai and Hyderabad leading demand. Female participation has also witnessed a rise in recent years, now constituting around 30% of the ~3.2 lakh active flexi talent pool in the IT/ITeS sector across India.⁸

Human Capital Management Industry

The Human Capital Management industry in India stood at $ 1,042.0 Million in 2025. Growth has been driven by the rise of remote and hybrid work models, necessitating advanced digital solutions for workforce management.

Additionally, Indias large population base and rapid economic expansion are increasing the demand for sophisticated HRM solutions to address evolving organisational complexities. Looking ahead, the market is projected to grow at a CAGR of 11.86%, reaching an estimated valuation of $ 2,942.7 Million by 2034.

EdTech and Employability Industry

The global EdTech market was valued at $ 279.8 billion in 2025, with North America accounting for over 38.7% of the market.

Growth is driven by increasing adoption of digital learning, with user experience (UX) design, intelligent tutoring systems and advanced assessment tools. Rising focus on lifelong learning and professional training, gamification and coding education further supports the expansion. The market is projected to reach $ 760.0 billion by 2034, reflecting a CAGR of 11.39%.⁹

Apprenticeship Market

Apprenticeship serves as a vital bridge between formal education and employment by enabling youth to acquire industryrelevant skills through structured, work-based learning. These programmes enhance productivity and innovation for businesses by aligning talent development with business requirements.

Government initiatives as the National Apprenticeship Promotion Scheme (NAPS) and National Apprenticeship Training Scheme (NATS) have strengthened this ecosystem by integrating practical training with theoretical learning.

Under NAPS 2.0, employers receive financial support through reimbursement of 25% of the stipend prescribed, up to ^1,500 per apprentice per month. This scheme also provides up to T7500 per candidate for basic training not exceeding 500 hours, addressing foundational skill gaps. NAPS forms part of the broader Skill India programme, alongside initiatives such as Pradhan Mantri Kaushal Vikas Yojana (PMKVY) 4.0 and Jan Shikshan Sansthan (JSS).

RegTech Industry¹⁰

The global regulatory technology (RegTech) industry was valued at $ 18.6 billion in 2025. The industry is supported by the heightened demand for cutting-edge RegTech solutions that enhance risk management and provide advanced data analysis. Other contributing factors include the increase in financial crime cases, including unauthorised transactions and customer funds theft, along with the flourishing of the e-commerce industry. With the increasing digitisation of internal industry processes, RegTech has become one of the key methods to help financial authorities gain more insight into competitive conditions and the intricacies of a digital economy.

As of 2025, North America leads the demand, commanding more than 41% of the global market share. High number of instances involving fraud, including money laundering and phishing, and close collaboration between financial firms and government agencies is driving demand in the region.

In this context, the US has proven to be a crucial market as a result of highly complex regulatory requirements in a wide range of sectors. In order to cope with these challenges, the financial sector is actively applying RegTech to achieve compliance, reduce costs and prevent any negative consequences from not complying with regulations. Further, the introduction of advanced technologies like AI and blockchain has led to significant changes in the industry through enabling better analysis and reporting capabilities. Additionally, the growing use of RegTech to address issues emerging because of the digitisation of processes and give financial authorities deeper insights into the dynamics of competition is offering a favourable market outlook. Looking ahead, the market is projected to reach $ 77.0 billion by 2034, reflecting a CAGR of 1710% between 2026 and 2034.

Company Overview

Since its inception in 2002, TeamLease Services Limited has established itself as an end-to-end people supply chain solutions provider, delivering integrated workforce solutions across the employee lifecycle. The Companys staffing solutions span manpower sourcing, talent acquisition, workforce digitisation, productivity enhancement and compliance management.

TeamLeases ISO 27001-certified integrated IT platform supports 3.5 lakh associates and apprentices and offers unique benefits plans that help manage attrition. The Company helps businesses build agile, compliant and future-ready workforces through scalable, technology-driven solutions across the 3Es: Employment, Employability, and E-workforce. Driven by the mission of Putting India to Work, the Company has successfully bridged the gap between industry requirements and employee skills. As the countrys leading staffing company, utilising robust technological infrastructure and extensive operational reach, TeamLease continues to enhance employability at scale.

Business Portfolio

General Staffing

The Company continues to maintain its leadership position in the general staffing segment, with an overall strength of associates numbering at around 2,86,500. During the year, this segment experienced a moderation in revenue momentum, primarily attributable to increased hiring in nonmetro regions, where average salary levels are considerably lower than those in the urban areas. However, with for the growing emphasis on workforce formalisation, the outlook for this segment remains resilient.

Specialised Staffing

The specialised staffing division delivered a steady performance despite challenging conditions in the IT sector. Hiring demand remained measured, with a focus on niche and high-skill roles rather than volume-based recruitment.

The Company partners with over 100 GCCs across sectors, including life sciences, BFSI, engineering, consulting, consumer, telecom and technology. These engagements are supported by scalable engagement models such as BOT and staffing solutions. Continued expansion across both existing and new GCCs is driving revenue and margin growth, supported by rising demand in areas related to AI, data, cloud and cyber security.

Degree Apprenticeship (DA)

The DA segment is supported by government initiatives such as NAPS and WILP. During FY 26, net apprenticeships declined by 2,400, primarily due to regulatory-led transitions by large clients.

The Company remains focused on promoting apprenticeships adoption within GCCs and select industries, in order to enabling companies to more effectively utilise their apprentice programs for developing talent. Additionally, the Company collaborates with over 20 universities to strengthen education-integrated apprenticeship programmes.

Hiring and Recruitment

The hiring segment demonstrated resilience despite off-season downtrends and moderate growth. Operations continued to evolve towards digitally enabled models, resulting in lower costs to serve and improved client experience.

The adoption of Al-driven recruitment technologies, along with process improvements, has led to higher operational efficiency and improved client onboarding outcomes. During FY26, the Company onboarded 25 new clients, primarily across manufacturing, consumer goods and financial services sectors.

Compliance

Compliance remains a cornerstone of the Companys business strategy. The Company is committed to adhering to applicable labour and corporate laws, positioning itself as a reliable outsourcing partner for organisations operating within Indias complex regulatory environment.

HRTech Services

The HRtech segment leverages AI-based automation to optimise recruitment, payroll processing and talent analytics.

Recent acquisitions, including TSR and Wallet, have strengthened the Companys technological capabilities and contributed to improved hiring efficiency and cost optimisation. The Company continues to invest in this segment across both sales and the product front.

Learning Services

The learning solutions business continues to expand through focused upskilling and reskilling initiatives. During the year, the Company added 117 new client logos, with approximately 20% of our total client base and around 30% of our apprentices adopting its learning solutions.

This adoption highlights the role of learning interventions in enhancing productivity, attrition reduction and improving apprentice engagement.

Financial Highlights

Human Resource

Human capital remains a critical enabler of the Companys growth and operational excellence. During the year, the Company focused on addressing operational challenges while sustaining business momentum.

The Company is committed to fostering a work environment that promotes employee motivation, positive workplace relations and continuous professional development. In FY 2526, several initiatives were undertaken to enhance productivity, improve employee morale and provide opportunities for employees to demonstrate their capabilities. The Company

also continues to emphasise diversity and inclusion, with the objective of building a more inclusive and balanced workforce.

Risk Management

The Company has established a comprehensive risk management framework aimed at identifying, prioritising, analysing, minimising and monitoring key risks that may impact its operations and performance.

This framework is overseen by the Risk Management Committee (RMC), which ensures the implementation of appropriate mitigation strategies to minimise potential adverse impacts. The Enterprise Risk Management (ERM) process forms an integral part of this framework, enabling a structured and proactive approach to risk management across the organisation.

Internal Control Systems and their adequacy

The Company has established internal controls that are appropriate for its size and complexity, The Company has put in place these controls to ensure that its financial reporting is accurate. In order to avoid any biases when conducting these audits, they are conducted by an independent third party. This report is then reviewed by the Audit Committee before being submitted to the Board. The internal auditor also conducts ongoing audits to ascertain the effectiveness of these control systems.

Cautionary Statement

The objectives, estimates, expectations, projections and outlooks of the Company that are described in this report constitute forward-looking statements as defined by applicable securities laws and regulations. The actual outcomes may not match these implied or stated expectations, projections and other factors. The Company has no direct control over the future events and certain assumptions that underlie the statements. The Company disclaims all liability for publicly amending, changing and revising any of the statements in light of any new information, events, or developments.