Indian IT Stocks Tumble as U.S. H-1B Visa Overhaul Bites
New visa fee hikes and stricter wage rules from Washington threaten the operational models of India's top software exporters, sparking investor concern.
India's heavyweight IT and software services sector is facing significant headwinds as investor sentiment sours over sweeping changes to the U.S. H-1B visa program. The MSCI India Index has , reflecting growing anxiety about the future profitability of an industry heavily reliant on access to skilled talent in the United States.
The policy overhaul includes a substantial increase in H-1B visa fees and stricter prevailing wage rules, measures designed to prioritize the hiring of American workers. These changes directly impact the bottom line for Indian tech giants, which have long used the H-1B program to rotate skilled employees into U.S.-based projects. The U.S. market is critical for the sector, , making any disruption a significant threat to revenue streams.
The financial implications are substantial. With Indians historically securing the vast majority of H-1B visas——the increased costs are forcing a strategic rethink. Major firms like TCS, Infosys, and Wipro are now expected to accelerate the shift toward offshore service delivery and increase local hiring within the U.S., potentially altering a business model that has been successful for decades.
Market reaction has been swift, with selling pressure hitting the stocks of top IT exporters. While the long-term impact remains to be seen, the visa rule changes have introduced a significant layer of uncertainty. In response, many Indian IT companies are recalibrating their operating models, aiming to reduce their dependency on the H-1B program by . This strategic pivot, however, will require time and investment, leaving the sector vulnerable to near-term volatility.