New Labour Codes Hit IT Giants: TCS, Infosys, HCLTech Incur Over Rs 4,000 Crore in Q3

• TCS, Infosys, and HCLTech collectively incurred over Rs 4,373 crore in exceptional charges during Q3 due to new labour codes.
• Infosys reported a Rs 1,289 crore exceptional charge, TCS Rs 2,128 crore, and HCLTech Rs 956 crore, leading to profit declines.
• The charges primarily cover increased gratuity and leave liabilities arising from past service costs.
• While TCS and HCLTech maintained or grew operating margins, Infosys saw a significant decline from 21% to 18.4% in Q3.
• Companies expect a limited ongoing impact of 10-20 basis points on margins, but brokerages like Jefferies foresee continued margin pressures and lower wage hikes.

Why It Matters: New labour codes led to over Rs 4,000 crore in exceptional charges for top IT firms in Q3, impacting profits.