{"id":85188,"date":"2025-11-26T00:00:00","date_gmt":"2025-11-26T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/mena-india\/indias-new-labor-codes-to-lift-it-payroll-costs-up-to-10\/"},"modified":"2025-11-26T00:00:00","modified_gmt":"2025-11-26T00:00:00","slug":"indias-new-labor-codes-to-lift-it-payroll-costs-up-to-10","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/mena-india\/2025\/11\/26\/indias-new-labor-codes-to-lift-it-payroll-costs-up-to-10\/","title":{"rendered":"India\u2019s new labor codes to lift IT payroll costs up to 10%"},"content":{"rendered":"

Payroll<\/strong> costs to rise under new labor regime: <\/strong>India\u2019s IT and IT-enabled services sector faces a payroll hike of up to 10% after the rollout of the country\u2019s new labor codes<\/a>, with mandatory annual health checkups for employees over 40 and expanded wage definitions set to push up provident fund, gratuity, and leave liabilities, Business Standard<\/a> reports. The rules bring the IT industry, employing some 5.8 mn people, under the Occupational Safety, Health, and Working Conditions Code for the first time, which in turn will tighten norms on working hours, overtime, terminations, and welfare.<\/p>\n

(** Tap or click the headline above to read this story with all of the links<\/strong> to our background and outside sources.)<\/p>\n

Pressure on margins<\/strong> will intensify amid compliance reset: <\/strong>Large firms such as Tata Consultancy Services, Infosys, Wipro, and HCLTech will need to revisit contracts, compensation structures, and staffing models, even as they have delayed pay hikes to protect margins under a volatile demand environment shaped by artificial intelligence. The mandated 50% minimum basic pay will reduce take-home salaries but lift retirals, further raising employer costs. <\/p>\n

Companies are already anticipating d<\/strong>ouble-digit cost<\/strong> increases<\/strong> due to the new <\/strong>Digital <\/strong>Personal Data Protection Rules<\/strong> \u2014 see our coverage here<\/a> \u2014 which will primarily impact big tech firms such as TCS, Infosys, Wipro, and Tech Mahindra. The new obligations, alongside rising compliance expenses under India\u2019s data protection rules, are likely to be passed on to clients, adding near-term pricing pressure for a sector already grappling with weak top line growth.<\/p>\n

BACKGROUND- <\/strong>The law reform consolidates 29 existing laws into four new comprehensive codes, fundamentally redefining key employment terms. Notably, the definition of \u201cemployee\u201d is broadened to include all staff, while the term \u201cworker\u201d is now limited to those earning a maximum of INR 18k per month and engaged in manual, technical, clerical, or supervisory duties. This overhaul will cause major shifts across critical areas such as overtime rules, retrenchment processes, leave encashment, the treatment of contract labor, and dispute resolution mechanisms, per an Ernst & Young report<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

Payroll costs to rise under new labor regime: India\u2019s IT and IT-enabled services sector faces a payroll hike of up to 10% after the rollout of the country\u2019s new labor codes, with mandatory annual health checkups for employees over 40 and expanded wage definitions set to push up provident fund, gratuity, and leave liabilities, Business […]<\/p>\n","protected":false},"author":1,"featured_media":85189,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"newspack_ads_suppress_ads":false,"newspack_popups_has_disabled_popups":false,"newspack_sponsor_sponsorship_scope":"","newspack_sponsor_native_byline_display":"inherit","newspack_sponsor_native_category_display":"inherit","newspack_sponsor_underwriter_style":"inherit","newspack_sponsor_underwriter_placement":"inherit","ep_exclude_from_search":false,"_primary_brand":0,"newspack_featured_image_position":"","newspack_post_subtitle":"","newspack_article_summary_title":"Overview:","newspack_article_summary":"","newspack_hide_updated_date":false,"newspack_show_updated_date":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[2475],"tags":[2402,2621,2600,2467,2416],"brand":[],"newspack_spnsrs_tax":[],"class_list":["post-85188","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-policy","tag-enterpriseam-india","tag-it","tag-labor","tag-policy","tag-tech","wpautop","entry"],"acf":{"mongo_id":"29c6884a-42e7-46c5-bc80-67f98f2def1a","order":"4","is_powered_by":false,"story_type":"1","photo_url":"https:\/\/ent.news\/2025\/11\/1239.jpg","photo_position":"above","homepage_title":"","full_issue_title":"IT services brace for tighter labor norms, rising costs under new codes","related_issue":[85182],"teaser":"","voice_url":"https:\/\/s3.us-east-1.amazonaws.com\/ent.news\/audio\/2025\/11\/.234a6df7-7184-4953-a7a7-97681f406088.mp3"},"yoast_head":"\nIndia\u2019s new labor codes to lift IT payroll costs up to 10% - MENA India Corridor<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/enterpriseam.com\/mena-india\/2025\/11\/26\/indias-new-labor-codes-to-lift-it-payroll-costs-up-to-10\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"India\u2019s new labor codes to lift IT payroll costs up to 10%\" \/>\n<meta property=\"og:description\" content=\"Payroll costs to rise under new labor regime: India\u2019s IT and IT-enabled services sector faces a payroll hike of up to 10% after the 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