TCS, Infosys, HCLTech Face ₹4,000 Cr Hit from Labour Code Changes

India’s new labour codes, implemented in late 2025, forced TCS, Infosys, and HCLTech to absorb over ₹4,000 crore in one‑time charges during Q3 FY26, sharply denting profits. These costs stemmed from recalculations of employee benefits like gratuity, leave encashment, and post‑employment liabilities.

What Happened

• Implementation date: November 21, 2025
• Impact: Exceptional charges booked in Q3 FY26
• Total burden: ~₹4,373 crore across the three IT majors
• Nature of costs: One‑time provisions tied to statutory employee benefits under the new labour framework

Company‑wise Highlights

Company	Exceptional Charge (Q3 FY26)	Key Notes
Infosys	₹1,289 crore	Reported as statutory impact of labour codes, dragging down net profit
TCS	Not disclosed individually, but part of total	Absorbed significant costs under employee benefit recalculations
HCLTech	Not disclosed individually, but part of total	Similar impact from gratuity and leave liability changes

Why It Matters

• Profit hit: All three companies saw double‑digit declines in quarterly profits due to these charges.
• Margins: Operating margins compressed in Q3, though management teams emphasized the impact is largely one‑off.
• Future outlook: Firms expect limited long‑term margin pain, as the recalibration of employee liabilities is now complete.

Risks & Considerations

• Employee costs: The new framework reshapes how wages, gratuity, and leave liabilities are calculated, potentially raising baseline costs.
• Investor sentiment: Short‑term earnings pressure may weigh on stock performance, but clarity on limited future impact could stabilize outlook.
• Industry precedent: Other IT firms may face similar adjustments, though the largest players bore the brunt first.

Bottom line: The ₹4,000+ crore Q3 bill from India’s new labour codes was a painful one‑time adjustment for TCS, Infosys, and HCLTech. While it dented profits sharply, the companies are signaling that the worst of the margin impact is behind them, with future quarters expected to normalize.