Quess Corp, the workforce and staffing company, calls the pandemic a 'once in a generation' moment that is forcing businesses to re-engineer and refocus. 'We have taken some decisions in the past few weeks that will be impacting the business,' Ajit Isaac, the Managing Director says, 'These decisions have implications on growth, cash flow and the balance sheet'.
CEO Suraj Moraje says that Quess delivered a strong FY20 with revenues up 29%, ROE up 30%. "We are especially pleased with the growth of general staffing," he says. This also, he adds, gives Quess a strong base from which to respond to the pandemic. He notes that Quess started reacting when it saw early effects in Singapore and Philippines. 'Quess has put three taskforces together to address the challenges we foresaw', he says. 'They are focusing on three things: customers, costs, cash.'
Customers
The management notes that Quess' downside has been protected by limited exposure to the worst affected industries like aviation and entertainment, as well as SMEs.
Most Quess employees are perpetually outsourced and frontline staff, which are relatively less affected. The impact has been less than feared. Employee count through April was 5% down from the Feb numbers at 365,000 employees. 'Our line of sight is a similar decline in May and June.'
Looking to gain market share through the recovery, Moraje says that customers are 'seeing the difference between adults and children' among service providers, 'We have new collaterals that we are pushing aggressively, alongside new sales efforts. We are gaining new customers - we added 38 new customers'.
Costs
Due to cost control efforts, Quess says that they recorded 20% lower costs in April from the baseline two months earlier. This if sustained, would transition into an annual savings of Rs 360 crores per annum. Moraje says. 'Should we have a sustained downturn, we will grow more aggressive on cost.'
Cash
The business services industry, Quess insists, 'is counter-cyclical to the economy when it comes to cash'. Moraje adds, 'Many of our peers in North America and Europe have gone into buybacks. For Quess, our April collections have been a bit lower, but spillovers have been collected and we expect no defaults'. The company is adjusting its exposure, to reduce exposure to low cash flow businesses.
Overall associate headcount was down 5% from peak pre-COVID19. Impact on June is too early to say. There have been enquiries about re-negotiating some contracts, the company says, but this has mostly been under control. Some softness in IT staffing is also visible, but 'we are largely on plan'.