The rollout of India's new labour codes, which became effective on November 21, 2025, has significantly impacted the profit margins of leading Indian IT firms. These reforms consolidate 29 older labour laws into four comprehensive codes, fundamentally altering wage definitions and social security contributions. Major IT companies, including Tata Consultancy Services (TCS), Infosys, HCLTech, and Wipro, have reported substantial one-time charges in their December quarter (Q3 FY26) earnings. TCS booked a hit of ₹2,128 crore, Infosys ₹1,289 crore, HCLTech ₹956 crore (EBIT impact), and Wipro ₹3,028 million (₹302.8 crore) due to these changes. Collectively, the top five Indian IT services companies absorbed over ₹4,900 crore in additional expenses. This reflects higher gratuity obligations and accumulated leave liabilities arising from the revised framework. Beyond these one-time adjustments, the new codes are projected to lead to recurring cost increases. Wage bills are estimated to rise by approximately 3-5% annually. Analyst firm Jefferies predicts that a 2% rise in employee costs could reduce IT companies' FY27 earnings estimates by 2-4%. This is primarily due to the mandate that 'wages' must constitute at least 50% of an employee's total compensation, thereby increasing the base for provident fund (PF), gratuity, and leave encashment calculations. The impact extends to employees as well, with expectations of lower monthly take-home pay, particularly for senior staff, as higher statutory deductions are made. To manage these increased costs, IT firms are anticipated to moderate future salary hikes, especially at senior levels, effectively using increments to offset the higher statutory contributions. While companies acknowledge the immediate financial impact, many express that the bulk of the pain is non-recurring, with ongoing effects estimated to be a limited 10-20 basis points annually on margins.