Wipro, TechM, LTIMindtree, Infosys: India's top six IT services firms take ₹5,400 crore hit from new labour codes

The top six IT companies, TCS, Infosys, HCLTech, Wipro, Tech Mahindra, and LTIMindtree, took a combined hit of about ₹5,400 crore on account of the implementation of new labour codes, the one-time charge eroding their Q3 FY26 earnings performance substantially.

The new regulations, which consolidate 29 existing labour laws, have forced a structural shift in how companies calculate employee benefits.

TCS CFO Samir Seksaria noted that the hit included ₹1,800 crore for gratuity and ₹300 crore for leave encashment, warning that the codes will continue to shave 0.10–0.15 per cent off margins moving forward.

The impact of the labour code was visible across most frontrunners' earnings and will be reflected in upcoming results too, as more companies are slated to announce their Q3 numbers.

CFO Rohit Anand cautioned that the code would shave 0.20% off margins quarterly.

Despite the hit on profit-and-loss statements, the operational health of the IT sector remains resilient, with the top management of these companies pointing to a "robust" deal pipeline and a massive surge in AI-led demand.

India's new labour code: What you need to know

In November 2025, the government consolidated 29 pre-Independence and early post-Independence labour laws, many of them drafted between the 1930s and 1950s, into four comprehensive labour codes:

• the Code on Wages 2019;

• the Industrial Relations Code 2020;

• the Code on Social Security 2020; and

• the Occupational Safety, Health and Working Conditions Code 2020.

Together, these new codes aim to simplify compliance, expand worker protection, and modernise employer–employee relationships in a rapidly changing economy. The central government announced the implementation of these codes on November 21, 2025.

From appointment letters becoming mandatory to gig workers receiving social security to enhanced rights for women and contract labour, the changes reflect India’s attempt to balance ease of doing business with stronger worker welfare.

The impact

Union Labour Secretary Vandana Gurnani termed the new labour codes as a game-changer for a dynamic economy.

The complexities and the outdated laws have been done away with, and rules are now being streamlined into four codes enacted in 2019-20 and activated from November 21, 2025, she pointed out.

She said, "These codes are now fit for purpose in terms of what the current nature of employment is and the significant economic growth India is witnessing."

Gurnani mentioned the easing of various compliance norms, including the reduction in the number of registrations from 8 to one, 31 returns to one, and 87 registers to eight.

She emphasised that the new codes will ensure minimum wages, mandatory appointment letters, and enhanced social security for workers, alongside business-friendly shifts like inspector-led guidance and reduced criminal penalties, which will contribute significantly towards labour welfare.

As regards gratuity, under the new law, fixed-term employees are entitled to get gratuity within one year of leaving employment.

Full-time employees will continue to get gratuity after completing five years in the workplace.