Infosys takes Rs 1,289 crore hit on new labour codes in Q3 FY26, net profit dips

The IT company reported a 2.2 per cent decline in consolidated net profit to Rs 6,654 crore in the October-December quarter of FY26, as compared to Rs 6,806 crore in the year-ago period

New Delhi: Infosys on Wednesday reported a one-time exceptional hit of Rs 1,289 crore on account of the impact of the implementation of new labour codes, as India’s second-largest IT services firm announced its December quarter earnings.

Earlier this week, larger rival Tata Consultancy Services (TCS) said the implementation of the new labour codes during the quarter led to a “statutory impact” of Rs 2,128 crore, while Noida-headquartered HCLTech made a one-time provision of USD 82 million (Rs 719 crore) for the implementation of new labour codes.

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Infosys reported a 2.2 per cent decline in consolidated net profit to Rs 6,654 crore in the October-December quarter of FY26, as compared to Rs 6,806 crore in the year-ago period.

Revenue from operations grew 8.89 per cent to Rs 45,479 crore compared to Rs 41,764 crore in Q3 FY25. The company has raised its revenue growth guidance for FY26 to 3-3.5 per cent in constant currency, from 2-3 per cent earlier.

A significant highlight of the Q3 FY26 results was the impact of the government of India’s notification regarding the Labour Codes on November 21, 2025. These codes, which consolidate 29 existing labour laws, led to a substantial increase in the company’s employee-related liabilities.

“These Labour Codes consolidate twenty-nine existing labour laws into a unified framework governing employee benefits during employment and post-employment, and amongst other things, introduce changes, including a uniform definition of wages and enhanced benefits relating to leave.

“The adjustments for Labour Codes represent an increase in gratuity liability arising out of past service cost and an increase in leave liability, together by USD 143 million (Rs 1,289 crore), which is recognised in the Consolidated Statement of Comprehensive Income,” Infosys said in a regulatory filing.

On a quarter-on-quarter basis (Q2 FY26), its profit fell 9.6 per cent, while revenue increased 2.2 per cent.
Infosys CEO and MD Salil Parekh said the company’s differentiated value propositions in enterprise AI, through its ‘Topaz’ platform, are driving higher market share.

“Clients increasingly view Infosys as their AI partner with demonstrated expertise, innovation capabilities and strong delivery credentials. This has helped them unlock business potential and enhanced value realisation. Central to this journey is our commitment to reskill, transform and empower our dedicated human resource pool to drive success in an AI augmented world,” Parekh said.

During the quarter, Infosys clocked a large deal TCV (Total Contract Value) of USD 4.8 billion, with 57 per cent of it being net new. The company also completed its largest-ever buyback of Rs 18,000 crore and paid out an interim dividend during the period.

On the employee front, total headcount increased by 5,043 during the quarter to reach 3,37,034.

Shares of Infosys settled at Rs 1,599.05 apiece on the BSE on Wednesday, 0.07 per cent higher than the previous close. The financial results were announced after market hours.