New U.S. H-1B visa rules are creating waves across the Indian IT sector, forcing companies like Infosys, TCS, Wipro, and Tech Mahindra to rethink theirU.S. deployment strategies.
Indian IT stocks fell for the second consecutive day after the U.S. Department of Homeland Security (DHS) announced a significant overhaul of the H-1B visa program. The changes triggered concerns among investors regarding revenue growth, project staffing, and margins for major IT firms.
Background: H-1B Visa and Indian IT
The H-1B visa has been a critical tool for Indian IT companies for decades, allowing them to deploy skilled professionals to the U.S. for client projects. Historically, the lottery-based system gave large outsourcing firms access to thousands of visas annually, enabling cost-effective delivery of IT services across multiple industries.
- Infosys and TCS routinely send thousands of employees to the U.S., representing a significant portion of their revenue.
- Wipro, Tech Mahindra, HCLTech, and mid-sized firms like Coforge also heavily rely on H-1B visas for project staffing.
Key Changes in the H-1B Program
Effective February 27, 2026, the new rules introduced by DHS include:
- Abolition of the Random Lottery System
- Previously, visas were allocated randomly; now they will be weighted based on wages and skill levels.
- This shift favors higher-paid and specialized applicants, reducing chances for junior or mid-level employees.
- Priority to High-Wage Jobs
- The system now prioritizes applicants whose wages are higher, ensuring that the visas are directed toward roles deemed high-value in the U.S. labor market.
- Focus on Protecting American Workers
- DHS aims to minimize exploitation of the H-1B program and ensure that U.S. workers retain job opportunities in mid-level IT roles. (FT)
Immediate Impact on Indian IT Stocks
Following the announcement, Indian IT stocks experienced the following:
- Infosys: down 0.8%
- TCS: down 0.7%
- Wipro: down 0.6%
- Tech Mahindra & HCLTech: modest declines
The IT index reflected this sentiment as investors weighed the impact on staffing, delivery timelines, and profit margins.
Expert Opinions
- Deven Choksey, Market Analyst: “While short-term stock reactions are negative, Indian IT firms are increasingly relying on offshore delivery centers and automation. High-value services like AI and cloud may offset visa constraints.”
- Ravi Mehta, IT Policy Expert: “Companies focusing on specialized solutions and premium clients may actually benefit, but traditional staffing models relying on junior H-1B employees will face challenges.”
Long-Term Implications
- Shift to Offshore Delivery Models
- Companies may increase work done in India or other countries to compensate for reduced visa access.
- Emphasis on High-Value Services
- Expansion in AI, cloud computing, cybersecurity, and other specialized services could mitigate risks from reduced H-1B allocations.
- Investor Caution
- Short-term volatility may persist until market clarity emerges on visa allocations, cost structures, and revenue implications.
Strategic Responses by IT Firms
- Upskilling employees to qualify for higher-wage, specialized H-1B roles.
- Offshoring more projects to India or low-cost global delivery centers.
- Adopting automation and AI solutions to reduce dependence on on-site staff.
- Exploring alternative visa programs in Canada, Europe, and Australia to diversify risk.
Conclusion
The second-day decline in Indian IT stocks underscores the sensitivity of investors to regulatory changes in the U.S., which is the largest market for these companies. While short-term impacts include reduced visa access, potential margin pressure, and stock volatility, firms that strategically pivot to high-value services, offshoring, and automation may navigate the transition successfully. As February 2026 approaches, all eyes remain on visa policy implementation and its real-world effect on the Indian IT sector.
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Author: Team BTP
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