New Labour Laws Hit IT Giants: Profits Decline, Salary Growth at Risk

• TCS, Infosys, and HCLTech incurred Rs 4,373 crore in additional expenses in Q3 2025 due to new labour laws, leading to a double-digit net profit decline for all three.
• Infosys reported Rs 1,289 crore in extraordinary expenses, TCS Rs 2,128 crore, and HCLTech Rs 956 crore, primarily for gratuity and leave recalculations.
• Operating margins varied: TCS maintained 25.2%, HCLTech improved to 18.6%, while Infosys saw a sharp drop to 18.4% (would have been 21.2% without labour code impact).
• Companies anticipate a limited future margin impact of 10-20 basis points, but brokerage Jefferies warns of intensifying pressure and slower salary growth.
• New labour codes mandate basic salary to be at least 50% of CTC, increasing recurring employee costs and potentially affecting top-level salary hikes.

Why It Matters: New labour laws significantly impacted IT giants' Q3 profits, raising long-term concerns about margins and salary growth.