Quess, who trains people for a variety of jobs in the IT, hospitality and entertainment industries, said IT and ITES clients were delaying hiring new employees.

Quess’ recruitment and selection business, which typically has 13-17% margins and accounts for 7-8% of the company’s core revenue, has seen revenue decline by half.

Demand for IT candidates it trained fell to a fifth of its usual number in the current quarter, the company said.

Customers “try to delay (integration) for 30 or 45 days… (which) we’ve never experienced before,” Srinivasan said in an interview with Reuters.

The Bengaluru-based company has also had to deal with sharp wage increases that have squeezed margins at India’s major IT firms.

Reuters reported in August that major Indian IT services firms were freezing or cutting bonuses for their employees, concerned that tighter budgets for US and European customers could hit their own profits hard in the aftermath of the pandemic boom.

Srinivasan said the fourth fiscal quarter covering the January to March period “should be a bit better”, though he doesn’t expect earnings to start picking up until the first quarter of the following fiscal year.

Quess, also known for its Terrier security services and facility maintenance staff business, points to the expansion of economic activity in India’s small towns as a sign of growing demand for jobs despite unemployment.

Srinivasan also said the company’s job site Monster.com, which operates in India, Southeast Asia and the Middle East, would break even by the end of March 2024.

Work locations are part of a product-focused unit, which in the second quarter only accounted for 3.5% of revenue. The segment will continue to burn cash, with 60% of its investment going to marketing and the rest going to product development, Quess said.

Quess’ consolidated Q2 profit rose 12% to 4.21 billion Indian rupees ($52.14 million), but its core profit margin fell 32 basis points to 3.16%, dragged down by higher wages and the product-oriented sector.

($1 = 80,7500 Indian rupees)