When India overhauls its labour framework, the impact goes far beyond HR—it influences how global leaders evaluate India's competitiveness, scalability and long-term investment appetite.
Here's what GCC leaders should keep front and centre:
Employment costs are going up, and wage structure is the trigger
The new definition requires at least 50% of CTC to be classified as "wages." That change alone increases PF, gratuity and leave-encashment costs.
To put it in perspective:
- IT/ITES firms may see a 5%–10% rise in payroll costs
- A ₹12L salary could become ₹60k–₹1L more expensive annually
- A 4,000-employee GCC might absorb USD 4–6M in additional annual statutory payout
This is a real cost, but it also brings more predictability and workforce stability—something engineering and AI-focused teams value a lot.
Charge-outs and global budgeting will need rebalancing
GCCs operate within parent-controlled budgets. When statutory costs rise, billing models must move accordingly. A centre charging USD 1,500 per FTE per month may have to revise that to USD 1,600–1,650.
It's a tough adjustment initially, but it strengthens transparency, reduces audit friction and reinforces India's credibility as a compliant and well-governed delivery market.
Contracts and workforce models will require a thorough refresh
This means updating:
- Employment contracts
- MoUs and SLAs
- Vendor agreements
- Workforce models aligned to OSH norms
- Plus, mandatory annual medical check-ups for employees over 40
It's operationally heavy, but it also allows GCCs to finally:
- Standardise compensation
- Remove BU-level inconsistencies
- Strengthen multi-city governance
- Improve audit readiness
Expect shifts in employee sentiment and retention patterns
Some employees—especially in higher salary brackets—may see a dip in take-home due to higher PF contributions. But they also get:
- Stronger social security
- A larger PF corpus
- Clearer protections
GCCs that communicate these changes clearly and empathetically will see better retention.
Long-term planning becomes simpler—not harder
With uniform wage definitions and clearer compliance rules, 3–5 year modelling becomes far more predictable.
Predictability drives confidence.
And confidence drives investment.
Bottom Line - India's new Labour Codes mark a deeper strategic shift.
GCCs that adapt early—rethink compensation, recalibrate charge-outs, refresh contracts and strengthen governance—will position themselves as high-value, future-ready capability hubs in their global networks.
If you want the full 13-page deep dive, just comment 'IL' on the post.