TCS opened on Wednesday morning as the worst performer of the BSE Sensex and the NSE Nifty after posting lower-than-expected quarterly performance. TCS shares fell to as low as Rs 3,202.10 apiece, down from their previous closing price of Rs 3,268.
Later on Tuesday, India’s biggest IT services firm posted almost a 14 per cent dip in Q3 profit at Rs 10,657 crore. It also reported a drop in overall headcount by 11,151 in the October-December period to 5,82,163.
The Tata Group firm is also in the midst of a social media storm where a user of Reddit alleged that their in-hand salary slumped from Rs 25,000 in 2020 to Rs 22,800 in 2026 after 5.5 years with the company. THE WEEK could not independently verify the authenticity of the claims on the r/developersIndia forum or determine if it was another ‘karma farming’ post.
However, hearing about TCS is not new. Former employee, 32-year-old Rakesh K from Kollam, said that such stories were very much a "reality". After his training stint in another state and then getting posted at the Thiruvananthapuram office, Rakesh went on to quit his dream IT job just 2 years into it. "Some companies really make you hate a corporate job," he recounted. Rakesh now runs a car detailing shop back in his hometown.
TCS is not alone in such stories. Over the past year, rival Infosys was also dragged into the mud after it let go of around 350 freshers. The firm claimed they failed internal assessments despite being given three chances. The labour department got involved.
Around three years ago, in 2023, another IT major, Wipro, reportedly terminated more than 400 freshers after they failed internal assessments. This also caught the criticism from employee unions, who then questioned the fairness of hiring freshers, training them for months, and then dismissing them based on internal tests.
Back then, despite the Karnataka labour department getting involved, no action was taken. But the public outcry did force the IT major to reassess its training and termination policies.
Decoding the impact of labour codes
TCS, while posting its earnings, attributed the dip in its profitability to a one-time impact of new labour codes. The implementation of the Centre’s new labour regulations—lauded as ethically, morally, and fiscally pro-employee—seems to have had a "statutory impact" of Rs 2,128 crore according to TCS.
It even stated that if the new labour codes were not implemented, i.e., if the one-time impact was removed, its profit would have soared 8.5 per cent to Rs 13,438 crore.
According to Chief Human Resources Officer Sudeep Kunnumal, around 1,800 exits occurred due to a restructuring exercise announced in August, agencies reported. The IT major also announced earlier that around 12,000 people were fired as part of restructuring. In Q2, TCS also posted that overall headcount went down by 19,755.
Despite the "restructuring", TCS is still "minting money". Its topline rose by a little over 4.8 per cent to a whopping Rs 67,087 crore in the third quarter. However, according to Chief Executive and Managing Director K Krithivasan, artificial intelligence and the associated data revenues were the major drivers in the revenue growth. This was further confirmed in the earnings call by other company executives.
But Chief Financial Officer Samir Seksaria did flag that the new labour codes would continue to have a 0.10-0.15 per cent impact on margins going ahead.
This "impact" that TCS repeatedly mentioned mostly just leave encashments and gratuity—basic employee benefits. In fact, in the third quarter, from the Rs 2,100 crore TCS set aside for the provisions, Rs 1,800 crore was for gratuity, and Rs 300 crore was for leave encashments.
TCS is not just being punished by the market after this shoddy quarterly performance. It is being scrutinised by social media after the recent Reddit post. Moreover, its contributions from the country have also shrunk.
Even as TCS gained North America revenues, India contributions to its topline slide by over 34 per cent year-on-year. The nation now just adds to 6.1 per cent of the revenue mix.
In the past year, TCS stock has slumped a little over 24 per cent. Its five-year returns now stand close to a 0.7 per cent loss. And basic labour rights seem to be eating into the TCS pie.