Companies Are Placing More Plants In Offices, Offering Flexibility As Employees Weigh Return To Workplace: Quess Corp CEO

Bengaluru-based Quess Corp, one of India’s largest staffing companies and private sector employers, sees a turnaround in hiring sentiment for the first quarter ending June 2021 — a stark contrast from the same quarter last year, when there was a freeze in hiring at the onset of the pandemic. Its profit increased Rs 45 crore, up 22 percent year-on-year, and revenue stood at Rs 2987 crore, up 24 percent compared to the same period last year.

In this interaction with Moneycontrol, Suraj Moraje, Managing Director & Group CEO, spoke about hiring momentum, IT staffing, return to work and more.

Edited Excerpts:

It is a good set of numbers for the quarter ending June 2021. But sequentially, if I look at your revenue from operations, it has come down 0.6 percent to Rs 2987 crore, though it’s gone up by 24 percent from the same period last year. Can you share more on the trend you are seeing, and if things are getting better?

Yes, revenues have been flattish quarter-on-quarter. But I think it is a very different quarter from the first wave. If you look at the first wave we saw a 20 percent drop in revenues in Q1 last year. So you’re looking at a 20 percent drop versus flattish quarter on quarter, (it was because) Q1 (in 2021) was a tough environment as lockdown was longer. On a social level, it was much harsher than wave one. But the headcount went up, about 1.5 percent despite COVID. If you look at where we are now, we certainly see that we see hiring has resumed. We acquired 48 new customers in general staffing, and 246 new customers across the business. It is again higher than the 196 customers we acquired in the quarter one a year ago, which is 196. We are expecting growth to come back in Q2 as people gear towards festival season though people are keeping one eye on the timing, intensity and synchronicity of wave three. But we are certainly seeing green shoots.

Looking at your results, operating margins from domestic IT staffing have jumped 67 percent year-on-year, a stark contrast compared to 2020, when hiring saw a steep decline. What is driving the demand and outlook?

I think there is no doubt that the business is becoming more technology intensive. What that means is even if you’re in finance, you’re thinking through how to automate my processes, if you are an HR thinking about how you digitize attendance, automate your hire to retire process. Business today is technology and demand for technology skills is going through the roof. We have also reached a tipping point where most senior managers today are sufficiently technology literate, that they know what kind of technology interventions they want in the business. So I think that the demand for business and technology skills combined, or for just basic technology skills is going up.

In what areas is the demand for technology going up?

If you look at where the technology skills are needed, a lot of them are in sort of the new age like people who know how to build workflows, automate, and use tools like Selenium, programming languages like Python. That is where the skills are needed. And frankly, that is not where the skills are. So, there is a massive opportunity for retraining and rescaling here. And what we are seeing is, as we work with many, we are now starting to work with partners like software product developers to help them train people and build a bench in the skills or to build a reservoir of people with the right skills. I also suspect we are about to go into an era where a lot of non-tech people from non-tech backgrounds get trained to do basic things like training a bot or building a workflow in a low code, no-code platform. We still think of these as technology skills, but frankly, they don’t need to be a tech person. They just need you to be a process thinker or a problem solver. So I think we are going back into an era 20 years ago, where there is a joke that you walk past an IT services company and you have a graduate degree you are hired. I think we are going to go to that kind of a scenario, again, where people from very non-tech backgrounds will train themselves in basic platforms and get deployed.

As one of India’s largest private sectors, employers’ quest is also a proxy for formal sector employment in terms of how it’s going up. So can you give us a sense of how things are right now in terms of the hiring sentiment across the areas that you operate in?

The hiring sentiment has certainly improved through July. But I think that around the end of June, what has happened is that corporate India wants to make its targets this year. We have had two years, FY20 and FY21 that were difficult. I think there’s a determination to say we will somehow kind of hit our corporate business plans this year. I think that is also partly why through wave two, there were no de-mobilizations, as we came out of wave one, most people were surprised how quickly demand took off. By Q4, the economy was booming. What we are seeing now is the mandates are coming in. So hiring has certainly started. The sentiment is definitely positive, and I think people are keeping one eye to see where the third wave comes. I think a lot will depend on how intense it is. So you can at least at any point, you know, it will be one or two states where it flares up. And the rest of the states can actually surge ahead. So there is a hope that it will be less disruptive when it comes and that’s what is driving the optimism is my sense.

You’ve also been looking at investing in tech tools to monitor performance of various employees. As you move to these value-added services using tech, what impact will that have on your margins going forward and also in terms of the percentage of revenue or revenue that you will get as you move up the value chain?

I don’t want to give a projection on margin simply because I think we are taking early steps into that space. But let me tell you how we’re using these technologies. For example, take our security services. The pet peeve of anybody who has a security guard at night is that the person falls asleep. One of the things we’re automating is what we call the digital supervisor, an app that all of our security guards use. At random at night, it will ask the security guard to take a test. It could be entering a captcha code, walking 200 steps at random times. We measure the alertness of the guard, and we’re using this to just improve the quality of our services. Will something like this translate into improved budgets, probably, if at all, it will be minor, but over time will translate into improved services, and therefore improved satisfaction and therefore improved sales are at the other extreme. In that situation, if the customer says, ‘Look, as productivity goes up, we are happy to share an upside with you because this is higher revenue for us.’ So in those cases, it should result in a higher margin. I think we’re in the early stages of figuring out how to structure these deals. Where are we comfortable taking risks? Where are we not comfortable taking risks? This will scale up gradually and sequentially over time.

With the potential third wave looming, how do you see return to work panning out? Some of the IT firms are talking about returning to work. Do you see any particular time frame when people come back to work?

We certainly expect it (return to work) to look up and September-October is what customers are talking to us about. But if you look at Q4, some customers started coming back to the office and we thought that by June, most customers will be back. But I think it’s just difficult to give a prediction because I think COVID has been unpredictable in terms of when it rears its head and when it goes down. If wave three is not a big wave, (and) if we manage as a society, I think by September-October, people should be back to the offices.

As I travel and meet customers, they are saying, ‘Look, there is real fatigue in our businesses because people can’t meet. We are finding it difficult to motivate people, and we are finding it difficult to build a culture.’ Especially when you bring in new hires, it’s very difficult to onboard new hires into your company culture when they are working from home. If you look at the US and all the tech companies, a year ago they were saying, we are going to work from home forever. I always at that point, I said, I don’t believe it. And I think we’re starting to see some of that play out now. Because culture is a very intangible thing.

Globally there is push back against returning to work. For example, employees are even ready to take a pay cut. But they’re saying we don’t want to come to the office. Considering Bangalore, and its infamous traffic Mumbai and other cities, do you see that resistance in India as well?

I certainly think that COVID has altered the balance between labour and capital just a little bit. Is it temporary or permanent? We will have to see. But I think, for now, labour does have the upper hand in negotiating in many sectors, (if) not all right. Even in manufacturing and construction, you see that a lot of companies now are actually willing to move toward from daily wages to monthly wages, because they’re realizing that if you give your employees more security, then employees will be less likely to run away when there’s a lockdown because they understand their salaries are coming. And therefore you can ramp up faster.

At the same time, I think the assumption that everybody wants to work from home, is a gross simplification. If I look at our own organization, I think 80 percent of the people want to be in the office and they want the flexibility to be in the office. This is especially in the context of India, where most people don’t have privacy in their homes. We just don’t have the tools to be productive, and we don’t have the privacy to be productive. Frankly, work from home for many people has really become about not meeting friends. I believe that a bulk of people will want to be in the office a part of the time. My personal belief without the fact is that 60-80 percent of people will work from office within 60-80 percent of the time going forward. There will be a segment of people who say no, I want to be in Udupi, or Manali and work from there. I think those sorts of people will gravitate towards companies that are comfortable with people working remotely all the time. Will that percentage go up versus the percentage pre-COVID? Absolutely. I think it’ll be company specific. But the bulk of corporate India and the bulk of Indian employees will say we’re happy to come back to work. Yes, it is a pain but it improves our social lives, productivity, and frankly, improves our career prospects. Because, going to the office was also a place where you built networks. All of that is falling apart.

As we talk about returning to work, how has the expectation about workplaces changed for employees, not just from your clients’ point of view but also as an organization, because of the pandemic?

What we are seeing is that employees need to be reassured that when they come back to work, they will be safe. A lot of them are worried about their parents and children who are living with them. There is a need to make them feel as they enter the office that this is a safer place than when I left. For many organisations that has meant being very clear about the quality of sanitation in the offices. For example, I think just bringing in more plants strangely, has a great psychological effect on employees coming back, because they feel somehow more natural. It certainly means upgrading air conditioning systems. There is a much higher bar on sanitation, touchless, in the offices for sure. The cafeterias have to work differently. So the level of technology that you need to manage your workplace has gone up. That is one clear expectation that I see. The second expectation that I see is that when people come back to work, they will expect more flexibility as to when to be in the office and not. I think pre-COVID-19, Indian managers felt that if a guy’s not working under his/her nose they are not working. That has changed. People feel far freer to say, ‘Look, I’m leaving at three o’clock, I want to avoid traffic’. There is more trust in the workplace that you are going to get it done because you have got it done in the last 12 to 18 months. But one thing that has not changed, or for the worse, is it has made it a lot more difficult for our women employees to be in the workforce. Unfortunately, many males have not stepped up to take 50 percent of the work in the house. And so the woman ends up being a full-time employee, and a full-time mother and housekeeper, which has made it very difficult. This is also why I think in the context of India, many women will just want to come back to the office if they can. It is important that schools start for that reason because many women are not able to come because their kids and their husbands will not take responsibility for their education.

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