H-1B Visa Rule Changes: Infosys, TCS, and Other IT Stocks Fall Again
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. #image_cnbctv18.com 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. FOR MORE BLOGS - beyondthepunchlines.com Read the full article
