Infosys Q3 profit dips as labour codes weigh in
One-time `1,289-cr provision dents earnings, company raises FY26 growth outlook
Mumbai: IT major Infosys on Wednesday reported a decline in its consolidated net profit for the October–December quarter (Q3 FY26), mainly due to the impact of the Indian government’s recent Labour Code norms.
Infosys reported a one-time exceptional hit of Rs1,289 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.
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 $143 million (Rs 1,289 crore), which is recognised in the Consolidated Statement of Comprehensive Income," Infosys said in a regulatory filing.
Infosys said its consolidated net profit fell 2.2 per cent year-on-year (YoY) to Rs 6,666 crore in the third quarter, compared with Rs 6,822 crore in the same period last financial year (Q3 FY25).
On a quarter-on-quarter (QoQ) basis, profit dropped sharply by nearly 9.6 per cent from Rs 7,375 crore reported in the previous quarter of the current financial year (Q2 FY26), according to its stock exchange filing.
Despite the pressure on profits, the company’s revenue performance remained strong. Revenue from operations rose 9 per cent year-on-year (YoY) to Rs 45,479 crore during the quarter. Along with the results, Infosys also raised its revenue growth outlook for the full financial year. The company revised its FY26 revenue guidance upward to 3–3.5 per cent in constant currency terms, while maintaining its operating margin guidance in the range of 20–22 per cent.
