Labour code compliance adds ₹3,028 million to Wipro’s people costs

Wipro has absorbed a one-time employee cost of ₹3,028 million in the December quarter following the implementation of India’s new labour codes, underscoring the near-term financial impact of long-pending wage and social security reforms on large employers.

The charge, disclosed as part of the company’s third-quarter results, reflects higher gratuity obligations arising from past service costs under the revised labour framework that came into force in November 2025. The adjustment directly affected reported net income for the quarter, even as the company maintained operational discipline.

Wipro reported net income of ₹31.2 billion for the quarter ended December 31, down 7% year on year. Adjusted for the labour code impact, net income would have stood at ₹33.6 billion, broadly flat compared with the same period last year, the company said in its earnings statement.

Operating margins in the IT services business improved sequentially to 17.6%, marking the company’s strongest margin performance in several quarters. Management said the margin expansion reflected tighter execution and cost controls, partially offsetting the impact of statutory employee-related charges.

India’s new labour codes mandate that at least 50% of an employee’s cost-to-company be classified as basic wages, increasing the base for gratuity and other social security benefits. For IT services companies with large workforces and historically flexible compensation structures, the transition has required a recalibration of long-term employee liabilities.

Wipro said the labour code-related cost should largely be viewed as a one-time reset rather than a recurring burden. Chief financial officer Aparna Iyer told analysts that the ongoing impact on margins is expected to be limited, with the company continuing to focus on productivity, automation and disciplined hiring.

The company reported voluntary attrition of 14.2% on a trailing twelve-month basis, signalling a relatively stable workforce environment amid broader caution in the technology services sector. Wipro has not announced any large-scale workforce reductions, instead emphasising selective hiring aligned with demand.

Looking ahead, Wipro guided for flat to modest growth in its IT services business in the March quarter, reflecting continued uncertainty in client spending. While labour compliance costs are expected to remain embedded in the cost base, analysts say the sharper test will be whether companies can balance regulatory compliance, employee welfare and margin resilience as demand conditions evolve.