Industry gears up for paradigm shift

Days after the notification of 4 new labour codes, firms across sectors chalk plans to comply with the changed rules of the game

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Indian information technology (IT) services companies may see their payroll costs rise by up to 10 per cent following the implementation of the labour codes last week, according to experts. However, many agree that the new framework will help plug some gaps in a sector that has largely formalised over the past few decades.

The Indian IT/IT-enabled services (ITeS) sector is one of the largest employment-generating sectors. The industry is expected to have an employee base of 5.8 million in 2025-26, according to UnearthInsight.

A key cost will be the mandatory free health checkup for all employees above 40 years, which was not a legal requirement under the earlier codes, experts pointed out. A sizeable number of employees in Tata Consultancy Services (TCS), Infosys, Wipro, and HCLTech are mid-level managers above that age, and an annual medical test will certainly add to expenses. It, however, remains to be seen which items companies want to cover as part of the checkup and if there are tests for which they expect employees to bear the cost.