TCS, HCLTech Report Profit Hit From New Labour Codes In Q3 FY26

New Delhi, Jan 14 (KNN) Even as artificial intelligence (AI)-driven deal wins supported revenue growth for India’s top IT firms in the December quarter, profits have been affected due to the implementation of new labour codes, according to Tata Consultancy Services (TCS).

TCS Reports Significant Profit Impact
TCS reported a Rs 2,128-crore hit to profit during the quarter as employee costs rose following the new labour codes. This included Rs 1,816 crore for additional gratuity costs and Rs 312 crore for long-term compensated absences. 

The company attributed the incremental impact primarily to changes in wage definitions under the new codes.

The new labour codes, effective November 21, 2025, consolidate 29 existing labour laws into four codes covering wages, industrial relations, social security, and occupational safety and working conditions. 

The reforms standardise wage definitions and expand social security provisions, leading to higher employee-related costs and additional provisions for companies.

HCLTech Records One-Time EBIT Impact
HCLTech reported a one-time impact of Rs 956 crore on earnings before interest and tax (EBIT) in Q3 FY26 due to the new labour codes, with Rs 719 crore affecting net income. The company noted that Q3 FY26 EBIT margins, excluding the one-time impact, stood at 18.6 percent.

C Vijayakumar, CEO, HCLTech, stated during the post-earnings press conference that this is a one-time expenditure, and the company expects only minimal impact on profits in the coming quarters.

(KNN Bureau)