Indian IT Sector Faces Profit Pressure Amid Labour Code Costs and Workforce Changes

India's IT outsourcing sector, a $200 billion-plus industry, is experiencing profit pressures due to new labour codes increasing employee-related costs and higher US visa fees. Major firms like Infosys, TCS, and HCLTech reported double-digit profit declines in Q3 FY26, partly from one-time expenses linked to these regulations. Despite workforce reductions and cautious client spending amid global uncertainties, companies are optimistic about AI-driven demand and have raised revenue forecasts, signaling potential recovery in 2026.