Shares of India’s top IT services firms tumbled on Monday after the Trump-led US administration announced sweeping changes to the H-1B visa regime, including a steep $100,000 fee for new applications. The move, seen as a direct blow to Indian software exporters, triggered a sharp sell-off in technology stocks.
Tech Mahindra was the worst hit, sliding nearly 5% in early trade. Infosys, Tata Consultancy Services (TCS), HCLTech and Wipro also fell more than 2.5% each. The Nifty IT index shed almost 3%, making it one of the day’s worst-performing sectoral indices.
The market’s sharp reaction stems from the industry’s heavy reliance on H-1B visas. Around 60–70% of these work permits go to Indian nationals, mostly engineers deployed by firms such as Infosys, TCS, Wipro and HCLTech on client projects in the US.
On-site presence has long been central to their business model, with American clients preferring engineers on the ground and contracts often structured to include significant on-site billing. The sudden escalation in visa costs is set to raise deployment expenses and could squeeze profit margins on existing contracts, particularly in cost-sensitive areas like application development and consulting.
Analysts say Indian IT companies may be forced to recalibrate — shifting more delivery offshore to India, stepping up local US hiring at higher wage costs, or accelerating automation. Each path carries cost implications, explaining the investor jitters. While some costs may eventually be passed on to clients, the near-term earnings impact looks unavoidable.
Ponmudi R, CEO of Enrich Money, said GIFT Nifty signalled “mild negativity” at the open as the H-1B shock weighed on sentiment. “The steep hike in H-1B visa fees is a near-term negative for Indian IT firms, raising offshore deployment costs and forcing a pivot toward onshore or domestic delivery models,” he noted.
On a more positive note, confidence in India was bolstered as Japan’s R&I upgraded India’s sovereign rating to BBB+ with a stable outlook, a move expected to enhance its appeal to global lenders and potentially draw higher foreign inflows.
Domestically, the rollout of “GST 2.0” added another dimension. By slashing the number of tax slabs and reducing rates on a wide basket of essentials, the reform is expected to lift consumption in the festive season.
Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said the market could show “dualistic behaviour” — IT stocks reeling from global headwinds while domestic consumption themes gain momentum from tax cuts.
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