Global brokerage firm Jefferies warns that India's new labor codes, effective November 2025, could significantly impact IT companies' earnings and margins. The codes mandate wages constitute at least 50% of Cost to Company (CTC), increasing recurring employee costs and leading to a one-time hit from higher gratuity and leave encashment liabilities. Jefferies estimates a 10-20% drop in December-quarter profits and sustained margin pressure, with HCLTech and TCS already reporting impacts. Companies may offset costs through lower senior-level wage hikes.