New Labor Codes Hit TCS, HCL Profits: A Temporary Setback or New Reality?

• TCS and HCL Technologies reported significant profit drops due to new Labor Codes, impacting Q4 FY2026 results.
• TCS set aside ₹2,128 crore for gratuity and leave encashment, leading to a 14% profit decline; HCL took a ₹956 crore hit, causing an 11% drop.
• The new codes redefine 'Wages', increasing gratuity and leave encashment liabilities for companies.
• Brokerage firms like Nirmal Bang and Motilal Oswal see this as a temporary impact, maintaining 'Buy' ratings for TCS.
• Employees benefit from higher retirement savings, better leave management, social security for gig workers, and enhanced safety measures.

Why It Matters: New Labor Codes caused a one-time profit dip for IT giants, but promise long-term benefits for employees.