HCL Technologies Ltd on Monday reported an 11% year-on-year decline in net profit for the third quarter, as a one-time expense linked to the implementation of new labour codes weighed on earnings.
The Noida-based IT services major posted a net profit of ₹4,076 crore for the quarter ended December 2025, compared with ₹4,591 crore in the corresponding period last year, according to its regulatory filing.
One-Time Labour Code Costs Impact Profitability
The company attributed the decline primarily to additional costs incurred during the rollout of new labour codes, which significantly affected profitability during the quarter. HCL Tech said the implementation resulted in a one-time impact of ₹956 crore at the EBIT level and ₹719 crore at the net income level.
In dollar terms, the expense translated to $109 million at the EBIT level and $82 million at the net income level. Management clarified that these costs were non-recurring in nature and stemmed from compliance-related adjustments required under the updated labour framework.
Operational Performance Remains Stable
Despite the hit to profits, HCL Tech maintained operational stability during the quarter. The company continued to execute client engagements across key verticals, supported by steady demand for digital transformation, cloud services, and enterprise technology solutions.
Industry analysts noted that while the one-time expense affected headline numbers, the company’s underlying business performance remained resilient, particularly in an environment marked by cautious IT spending globally.
Board Declares Interim Dividend
Reflecting confidence in its long-term outlook, HCL Tech’s board declared an interim dividend of ₹12 per equity share for FY26. The dividend announcement underscores the company’s commitment to shareholder returns, even as it absorbs temporary regulatory-related costs.
The company has consistently maintained a shareholder-friendly capital allocation policy, balancing investments in growth with regular dividend payouts.
Management Commentary
Commenting on the results, CEO and Managing Director C. Vijayakumar said the company continued to focus on operational discipline and strategic execution amid evolving regulatory and macroeconomic conditions. He added that the labour code-related cost was a one-time adjustment and would not have a recurring impact on future quarters.
Outlook
Going forward, HCL Tech expects the financial impact of labour code implementation to remain behind it, allowing profitability to normalise in subsequent quarters. The company plans to focus on margin optimisation, efficiency improvements, and selective investments to support sustainable growth.
Promoted by billionaire entrepreneur Shiv Nadar, HCL Technologies remains one of India’s leading IT services firms, with a strong presence across global markets.