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

Major Indian IT giants, including TCS, HCLTech, Infosys and Tata Elxsi, have taken a major hit in their third-quarter profits due to the implementation of new labor laws announced by the Center last year.

Four companies reported steep double-digit declines for the quarter ending Dec. 31, 2025, according to the companies’ stock exchange filings.

The declines came as the Center notified the new Labor Code provisions on November 21, 2025. These provisions led to changes in the third quarter, causing companies to take a hit.

In total, companies lost approx. ₹They made a profit of ₹4,470 crore, claiming that they took a one-time hit due to the implementation of new labor laws.

Infosys profits fall

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

The company said its profits fell because it was hit ₹1,289 crore due to implementation of New Labor Laws.

“The regulation made in the Labor Law refers to the increase in the bonus liability arising from past service fee and the increase in the leave liability. ₹1,289 crore recognized in the Consolidated Statement of Comprehensive Income, Infosys said in its stock exchange filing.

HCLTech reports 11.2% profit decline

HCLTech reported an 11.2% drop in consolidated net profit on Monday. ₹4,076 crore in October-December quarter of FY26, one-time provision ₹719 crore for implementation of new labor laws.

HCLTech Human Resources Director Ram Sundararajan said the company has taken into account all necessary provisions in this quarter’s salary changes and does not expect any further significant cost increases related to the new rules.

TCS sees sharp decline in profits

TCS on Monday reported a 13.91% decline in December quarter profit. ₹10,657 crore, mainly due to the one-time impact of new labor laws.

Implementation of new labor laws in the quarter, ₹2,128 crore, the company said, adding that its profits would grow by 8.5% even if there was a one-time impact. ₹13,438 crore.

Tata Elxsi’s profits fall 45%

Tata Elxsi on Tuesday reported a 45.3% fall in third-quarter profit; This was mainly due to one-time compensation due to the country’s new labor laws.

The Bengaluru-based company has reported profits so far ₹109 crore for the quarter ended December 31.

Tata Elxsi has undertaken an extraordinary task ₹95.7 crore for the third quarter, marking a one-time increase in employee benefit provisions following India’s new labor laws.

New Labor Law hits companies

In November last year, the Center notified the new Labor Code provisions aimed at bringing change in the way India works. The Labor Laws combined 29 existing labor laws into a unified framework that regulates employee benefits during and after employment.

The new Labor Laws also introduced changes, including, among other things, the uniform definition of wages and benefits related to leaves and bonuses.