Behind the ₹4,500-crore profit slump: Why India’s IT majors TCS, Infosys, HCLTech, Tata Elxsi took a Q3 earnings hit

Indian IT giants such as TCS, HCLTech, Infosys and Tata Elxsi have taken a major hit in their Q3 profits due to the implementation of the new labour codes announced by the central government last year.

According to their stock exchange filings, the four companies reported a steep double-digit decline in profits for the quarter ended 31 December 2025.

The declines came as the Centre, on 21 November 2025, notified provisions of the new labour codes. These provisions brought about changes in the third quarter, which took a toll on the companies' profits.

In total, the companies lost approximately ₹4,470 crore in profit. The firms claimed that they had taken a one-time hit due to the implementation of the new labour codes.

Infosys profit falls

India's second-largest IT firm, Infosys, on Wednesday stated in a stock exchange filing that its profit for the December quarter fell to ₹6,654 crore as compared with ₹6,806 crore in the same quarter last fiscal.

The company said its profit declined as it took a hit of ₹1,289 crore due to the implementation of the new labour codes.

“The adjustments for Labour Codes represent an increase in gratuity liability arising out of past service cost and increase in leave liability together by ₹1,289 crore which is recognised in the Consolidated Statement of Comprehensive Income,” Infosys said in its stock exchange filing.

HCLTech reports 11.2% profit drop

HCLTech on Monday reported an 11.2% decline in consolidated net profit to ₹4,076 crore in the October-December quarter of FY26, hit by a one-time provision of ₹719 crore for the implementation of new labour codes.

HCLTech Chief People Officer Ram Sundararajan said that the company had factored all necessary provisions into the current quarter's pay changes and did not anticipate further substantial incremental costs related to the new rules.

TCS sees sharp decline in profit

TCS on Monday reported a 13.91% drop in its December quarter profit at ₹10,657 crore, mainly on a one-time impact of the new labour codes.

Implementing the new labour codes during the quarter resulted in a “statutory impact” of ₹2,128 crore, the company said, adding that but for the one-time impact, its profit would have grown 8.5% to ₹13,438 crore.

Tata Elxsi profit nosedives 45%

Tata Elxsi reported a 45.3% drop in third-quarter profit on Tuesday, primarily due to a one-time charge tied to the country's new labour codes.

The Bengaluru-based company reported a profit of ₹109 crore for the December quarter.

Tata Elxsi took an exceptional charge of ₹95.7 crore for the third quarter, citing a one-time increase in employee benefit provisions following India's new labour codes.

New labour codes hurt companies

The Centre, in November last year, notified provisions of the new labour codes, aimed at bringing changes to how India works. The labour codes consolidated 29 existing labour laws into a unified framework that governs employee benefits during and after employment.

The new labour codes also introduced changes, including a uniform definition of wages and benefits related to leaves and gratuity, among other things.