**Title:** Indian IT Giants Face Profit Declines Amid New Labour Codes
**Meta Description:** Major Indian IT firms report significant profit drops in Q3 2025 due to new labour codes, impacting their financial performance.
**URL Slug:** indian-it-giants-profit-decline-labour-codes
**Headline:** Indian IT Giants Experience Significant Profit Declines Due to New Labour Codes
In a challenging turn of events, leading Indian IT companies, including TCS, HCLTech, Infosys, and Tata Elxsi, have reported substantial declines in their profits for the third quarter of 2025. This downturn is primarily attributed to the implementation of new labour codes introduced by the central government last year. According to their filings with the stock exchange, these firms experienced a sharp double-digit drop in profits for the quarter ending December 31, 2025.
The decline in profits coincided with the notification of the new labour code provisions by the Centre on November 21, 2025, which significantly impacted the companies’ financial results. Collectively, these firms reported a staggering loss of approximately ₹4,470 crore in profits, citing a one-time financial hit due to the new regulations.
**Infosys Reports Profit Decline**
Infosys, India’s second-largest IT firm, disclosed in a recent stock exchange filing that its profit for the December quarter fell to ₹6,654 crore, down from ₹6,806 crore in the same quarter of the previous fiscal year. The company attributed this decline to a one-time charge of ₹1,289 crore related to the new labour codes. Infosys explained that this adjustment reflects an increase in gratuity and leave liabilities due to past service costs.
**HCLTech Sees 11.2% Profit Drop**
HCLTech reported an 11.2% decrease in consolidated net profit, amounting to ₹4,076 crore for the October-December quarter of FY26. This decline was primarily due to a one-time provision of ₹719 crore associated with the new labour codes. HCLTech’s Chief People Officer, Ram Sundararajan, indicated that the company had accounted for all necessary provisions in the current quarter’s pay adjustments and does not foresee any significant additional costs arising from the new regulations.
**TCS Experiences Sharp Profit Decline**
TCS reported a 13.91% drop in its December quarter profit, totaling ₹10,657 crore, largely due to the one-time impact of the new labour codes. The implementation of these codes resulted in a statutory impact of ₹2,128 crore, with TCS noting that, excluding this one-time effect, its profit would have increased by 8.5% to ₹13,438 crore.
**Tata Elxsi’s Profit Nosedives by 45%**
Tata Elxsi reported a staggering 45.3% decline in its third-quarter profit, primarily due to a one-time charge linked to the new labour codes. The Bengaluru-based company recorded a profit of ₹109 crore for the December quarter, taking an exceptional charge of ₹95.7 crore for increased employee benefit provisions resulting from the new regulations.
**Conclusion**
The implementation of the new labour codes has undeniably impacted the financial performance of major Indian IT firms, leading to significant profit declines across the board. As these companies navigate the changes, the long-term implications of the new regulations on their operations and profitability remain to be seen.
**FAQ**
**Q: How have the new labour codes affected Indian IT companies?**
A: The new labour codes have led to substantial one-time charges for major IT firms, resulting in significant profit declines in the third quarter of 2025.
