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Q3 Results: New Labour Codes Dent IT Majors’ Profits by ₹5,400 Crore

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India’s leading IT services firms reported a sharp one-time earnings impact in the December quarter as the implementation of the new labour codes forced changes in employee benefit provisioning. Collectively, the country’s top six IT companies—TCS, Infosys, HCLTech, Wipro, Tech Mahindra and LTIMindtree—absorbed a cumulative hit of around ₹5,400 crore, significantly weighing on their Q3 FY26 profit numbers. The new labour framework, which consolidates 29 existing laws, has altered the way companies account for benefits such as gratuity and leave encashment, resulting in substantial upfront provisions. Tata Consultancy Services (TCS), India’s largest IT exporter, faced the biggest impact. The company reported a statutory charge of ₹2,128 crore, leading to a 13.9% fall in net profit to ₹10,657 crore. CFO Samir Seksaria explained that the provision included roughly ₹1,800 crore towards gratuity and ₹300 crore for leave encashment. He also cautioned that the new codes are expected to reduce margins by 10–15 basis points on an ongoing basis. Infosys reported an exceptional one-time charge of ₹1,289 crore, which pushed its net profit down 2.2% year-on-year to ₹6,654 crore. CEO Salil Parekh said the labour codes would have a continuing annual margin impact of about 15 basis points. HCLTech recorded a one-off provision of ₹956 crore, dragging net profit down 11.2% to ₹4,076 crore. The company noted that, excluding this impact, profits would have registered growth. Wipro’s net profit declined 7% to ₹3,119 crore, affected by a ₹302.8 crore labour code-related charge along with restructuring costs. Tech Mahindra was the only major IT player to post profit growth during the quarter, with net profit rising 14% to ₹1,122 crore on improved margins. However, it too set aside around $30 million (approximately ₹272 crore) for compliance with the new wage codes. CFO Rohit Anand warned of a quarterly margin impact of about 20 basis points. LTIMindtree accounted for a one-time cost of ₹590 crore in Q3 due to the labour code implementation, adding to the sector-wide earnings pressure. Despite the near-term impact on profitability, IT leaders struck an optimistic note on business fundamentals, citing strong deal pipelines and accelerating demand driven by artificial intelligence (AI). Infosys posted an 8.9% rise in revenue to ₹45,479 crore in Q3 FY26 and raised its full-year revenue growth guidance to 3–3.5% in constant currency terms. The company reported large deal wins worth $4.8 billion during the quarter, with over half coming from new clients. Parekh highlighted strong momentum in AI adoption across customers, particularly in financial services, energy and utilities. Wipro’s revenue grew 5.5% year-on-year to ₹23,555.8 crore, supported by vendor consolidation and AI-led modernisation deals. CEO and MD Srini Pallia said enterprises globally are increasingly treating AI as a board-level priority, positioning the company well for future growth. Tech Mahindra secured new deals worth $1.096 billion in Q3, with CEO Mohit Joshi describing the demand environment as strong across regions and industry verticals. TCS reported a 4.86% increase in revenue to ₹67,087 crore. CEO K Krithivasan said AI and data-led services were key growth drivers, while COO Aarthi Subramanian noted that AI revenues rose 17% quarter-on-quarter to an annualised run rate of $1.8 billion. HCLTech posted a 13.3% rise in revenue to ₹33,872 crore, driven by a sharp sequential increase in advanced AI revenues and solid growth in engineering and R&D services. The company recorded $3 billion in net new bookings, up 43.5% year-on-year. CEO C Vijayakumar emphasised the firm’s focus on AI-powered offerings such as robotics, AI factories, custom silicon and large-scale digital transformation programmes. Hiring trends during the quarter were mixed. TCS reported a net reduction of over 11,000 employees, while Infosys and Wipro added 5,043 and 6,529 staff respectively. HCLTech indicated a strategic shift towards hiring “elite engineers,” offering significantly higher compensation to attract top AI talent. Source: PTI

Q3 Results: New Labour Codes Dent IT Majors’ Profits by ₹5,400 Crore Read More »

Wipro Cuts FY26 Fresher Hiring Outlook After Soft Q3 Performance

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Wipro has scaled back its fresher recruitment plans for the ongoing financial year FY26, now expecting to hire 7,500–8,000 graduates, compared to its earlier guidance of 10,000–12,000. The revision follows a subdued performance in the third quarter, during which the IT major onboarded only around 400 freshers. Addressing analysts during the company’s Q3 earnings call, Saurabh Govil, Chief Human Resources Officer at Wipro, said campus hiring remained slow in the quarter, prompting the company to reassess its annual intake target. Despite the moderation, Wipro’s cumulative fresher hiring for the year so far has crossed 5,000. While overall volume hiring has eased, the company is sharpening its focus on AI and deep-tech talent. Wipro has partnered with universities to set up nearly 50 Centres of Excellence, where it co-develops specialised curricula in areas such as artificial intelligence, cybersecurity and data analytics, and recruits students trained through these programmes. The company is also offering premiums for candidates with relevant client-facing experience and investing heavily in upskilling existing employees through certifications. During the October–December quarter, Wipro added 6,529 employees, taking its total workforce to 2,42,021. The headcount increase was largely due to the integration of the Harman DTS acquisition and the rebadging of staff from a major deal signed in the previous fiscal year. On compensation, Wipro said decisions on salary hikes are still under consideration. Financially, the company reported a 7% year-on-year drop in consolidated net profit to ₹3,119 crore in Q3 FY26, impacted by one-time restructuring costs and the implementation of labour codes. Revenue from operations, however, grew 5.5% to ₹23,555.8 crore, up from ₹22,318.8 crore in the same quarter last year. Source: PTI  

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TCS Announces 100% Variable Pay for Junior Employees Amid Steady Growth in Q2FY26

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Tata Consultancy Services (TCS), India’s largest IT services company, has announced the rollout of its quarterly variable allowance (QVA), with junior employees set to receive 100% of their entitlement. The company’s Chief Human Resources Officer, Sudeep Kunnumal, confirmed the development in an internal communication, highlighting that mid- and senior-level employees will also see a higher payout compared to last year. Kunnumal noted that annual salary revisions for employees up to grade C3A have been implemented effective September 25, with top performers securing double-digit increments. Typically, employees in grades C, C1, and C2—considered the junior band—receive both annual hikes and full variable pay, while those in senior roles have performance-linked payouts. “All associates up to grade C2 under the QVA plan will receive 100% of their quarterly variable allowance,” Kunnumal said in his message. “For grades C3A and above, the payouts will vary based on business performance, though the overall payout for this group will exceed last year’s levels.” In its second-quarter financial results for FY26, TCS reported a 3.8% sequential dip in net profit to ₹12,075 crore, down from ₹12,760 crore in the previous quarter. However, revenue rose 3.7% quarter-on-quarter to ₹65,799 crore, with constant currency growth of 0.8%. The IT giant also saw a reduction of nearly 20,000 employees during the September quarter, even as it doubled its talent base in advanced AI and machine learning skills to 1,59,000 professionals compared to the same period last year. Source: Economic Times

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TCS Offers Full Q1 Variable Pay to Majority of Employees, Keeps Hike Plans on Hold

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Tata Consultancy Services (TCS), India’s largest IT services provider, has disbursed 100% of the quarterly variable allowance (QVA) to over 70% of its workforce for the April–June quarter, according to an internal communication from the company’s HR head, Milind Lakkad. The remaining employees—primarily those in senior roles—will see variable pay linked to the performance of their specific business units. In an email shared with employees last week, Lakkad stated that all staff up to the C2 grade (or equivalent levels) will receive the full variable component for the first quarter. Employees in the higher C3 grade and above, which includes senior and leadership positions, will have their payouts adjusted based on business unit performance. TCS’s employee hierarchy begins with trainees at the ‘Y’ level, moving up through C1 (systems engineer), then C2, C3 (split into A & B bands), followed by C4, C5, and CXO levels. Responding to media queries, a TCS spokesperson confirmed the variable payouts, emphasizing that the process aligns with the company’s standard quarterly compensation framework. However, the company has not yet announced its annual salary increments, citing a challenging global business climate. TCS has seen revenue decline in dollar terms for three consecutive quarters, a trend driven by sluggish discretionary tech spending and broader economic uncertainties. During Q1 FY25, the company added 5,060 employees, bringing its total workforce to approximately 613,000. Reflecting on the quarterly performance, CEO K Krithivasan noted a continued delay in client decision-making and project commencements. “Discretionary investments remain muted and even worsened slightly this quarter due to ongoing global conflicts, macroeconomic concerns, and supply chain disruptions,” he said. Krithivasan added that a rebound in client spending is expected once there’s greater economic clarity. Source: Economic Times  

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TCS Q1 FY26: Attrition Rises Slightly to 13.8%, Net Profit Grows 6.7% YoY

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Tata Consultancy Services (TCS), India’s largest IT services company, reported a modest uptick in employee attrition during the first quarter of the financial year 2025–26. According to a regulatory filing on Thursday, the attrition rate for Q1 stood at 13.8%, up from 13.3% in the March quarter and 13% in the preceding December quarter. As of June 30, 2025, the company’s total workforce had grown to 613,069 employees, reflecting a year-on-year increase of 6,071 from the 607,979 reported at the end of March. Highlighting the company’s focus on skill enhancement, Milind Lakkad, Chief Human Resources Officer at TCS, stated, “Talent development remains central to our strategy. This quarter, our associates dedicated 15 million hours to upskilling, particularly in emerging technologies. We now have over 114,000 employees proficient in advanced AI capabilities.” The IT major also opened the earnings season for the June quarter by posting a 6.7% year-on-year rise in consolidated net profit, reaching ₹12,819 crore, compared to ₹12,105 crore in the same quarter last year. Revenue from operations witnessed a 1.3% increase, totaling ₹63,437 crore, up from ₹62,613 crore in Q1 FY25. Employee benefit expenses climbed 3.6% year-on-year to ₹37,715 crore, while the company’s overall expenses rose 1.6% to ₹48,118 crore. TCS also announced an interim dividend of ₹11 per share. The record date for eligibility is set for July 16, 2025, with dividend payouts scheduled by August 4, 2025. Source: Economic Times

TCS Q1 FY26: Attrition Rises Slightly to 13.8%, Net Profit Grows 6.7% YoY Read More »

No Relief for Infosys: Indian Government Maintains ₹32,000-Crore Tax Demand Amidst Canadian Fine

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Infosys is facing a substantial tax challenge from the Indian government, which has refused to reduce a ₹32,000-crore ($4 billion) tax demand related to GST regulations. The demand, issued last month, pertains to services received from Infosys’s overseas branches between July 2017 and the fiscal year 2021-22. This amount represents about 85% of Infosys’s revenue for the quarter ending June 30. Infosys has requested a ten-day extension to respond after recent discussions with Indian Income Tax department officials. Despite this, the Indian authorities have indicated they will not ease the demand. In a recent update, Infosys confirmed that the tax demand for the 2017-18 financial year, totaling ₹38.98 billion, has been resolved. The company maintains it has met all tax obligations and adheres to both central and state regulations. In addition to this domestic issue, Infosys has also faced scrutiny from Canada. In May 2024, the Canadian government imposed a fine of CAD 134,822.38 (₹82 lakh) on Infosys for underpaying the employee health tax for the fiscal year ending December 31, 2020. Infosys disclosed this penalty in a regulatory filing received from Canada’s Finance Ministry on May 9. The broader IT sector has also been impacted, with significant declines in stock prices for other major players like Tata Consultancy Services and Satyam Computer Services. This downturn follows Infosys’s stock performance, which saw profit-taking after meeting market expectations and experiencing a prior price surge. Reference by Mint

No Relief for Infosys: Indian Government Maintains ₹32,000-Crore Tax Demand Amidst Canadian Fine Read More »