IT's Big Five face $500 mn labour code hit to profit

India's new labour codes eroded the profits of India's five largest information technology (IT) services companies in the December quarter as they recorded ₹4,645 crore ($500 million) in upfront costs as higher contributions to employees' retirement benefits.

- Jas Bardia

The country's largest software services provider Tata Consultancy Services Ltd (TCS) incurred incremental costs of $238 million, while second-placed Infosys Ltd disclosed a $143 million impact, according to their quarterly earnings disclosures. HCL Technologies Ltd ($109 million), Wipro Ltd ($33.3 million), and Tech Mahindra Ltd ($30 million) followed.

Together, the Big Five employ more than 1.5 million people, making the sector one of the largest formal sector employers in the country.

In November last year, the Indian government implemented labour codes, which mandate that basic pay for employees account for at least 50% of total compensation, raising statutory payouts such as provident fund and gratuity.