At NEWSCENTRAL, we note that with the introduction of new labor laws in India, which came into effect in November 2025, many Indian companies, including the major players in IT and engineering, are facing a range of financial and operational challenges. One prominent example is Cyient, an Indian giant in engineering and digital design, which recently reported a 24.9% decline in profits for the third quarter of 2026. As a result, the company recorded a profit of ₹918 million (approximately $10 million), down from ₹1.22 billion in the same period the previous year. The main factor contributing to these results was ₹420 million spent to comply with the new labor regulations.
According to analysts at NEWSCENTRAL, these expenses significantly increased the company’s operating costs and impacted its financial results. We at NEWSCENTRAL believe that such changes in legislation are creating an additional burden for companies in sectors with a high demand for skilled labor, such as information technology and engineering. Growing social obligations and mandatory payments amid a labor shortage continue to put pressure on the financial performance of companies, including large players such as Wipro, TCS, and Infosys.
Moreover, Cyient reported a 0.7% decline in revenue in its key Digital Engineering and Technology (DET) segment, which accounts for about 75% of the company’s total income. This decline was also due to an unstable macroeconomic environment, economic fluctuations in global markets, and seasonal demand variations for services. At NEWSCENTRAL, we emphasize that despite the company’s efforts in digital transformation, external economic factors such as global inflation and reduced corporate investments continue to negatively affect results.
At the same time, as noted by Freddy Miller, Senior Analyst at NEWSCENTRAL, the company also incurred ₹80 million in expenses for mergers and acquisitions as part of restructuring its semiconductor division. This move signals Cyient’s intention to diversify, which is strategically important in a volatile market situation. Splitting the semiconductor division into a separate company may help Cyient focus on more profitable segments, such as semiconductors, where demand for high-quality chips and components is expected to grow in the coming years. We at NEWSCENTRAL forecast that this step could strengthen the company’s position in high-tech sectors and reduce its reliance on traditional markets.
However, despite these strategic efforts, in the short term, companies like Cyient are facing rising costs related to compliance with new labor laws, as well as labor market challenges. The shortage of skilled professionals remains one of the most serious issues for Indian companies in IT and engineering, impacting their financial results. We at NEWSCENTRAL emphasize that, in a labor shortage and with growing social obligations, companies will need to explore new ways to enhance operational efficiency, such as automation and productivity improvement.
Looking ahead, we at NEWSCENTRAL see that in the long run, companies like Cyient may use their strategic diversification efforts and the adoption of new technologies to strengthen their positions. The implementation of digital solutions and a stronger focus on the semiconductor sector will help improve the company’s resilience to external shocks and enhance its financial results.
NEWSCENTRAL recommends investors keep a close eye on IT companies like Cyient in light of ongoing labor law changes and economic uncertainty in India. In the short term, these companies will face high costs associated with labor compliance and economic instability. However, those that actively innovate, diversify their assets, and invest in new technologies will be able to achieve new levels of growth and profitability in the future. We predict that these companies will be more competitive and capable of achieving stable growth in the long term.
NEWS CENTRAL notes that despite the challenges companies face in the short term, steps such as diversification and digital transformation will ensure Cyient’s competitiveness and sustainability in the future, creating new growth opportunities in promising sectors like semiconductors and high technologies.