Indian IT giants tumble as Trump’s H-1B shock sparks fears of cost surge

Dubai: Indian technology stocks plunged Monday after US President Donald Trump unveiled a sweeping overhaul of the H-1B visa program, threatening to squeeze margins at outsourcing giants that depend heavily on the US for business.

The plan, which slaps a steep $100,000 fee on new H-1B applications, could upend the operations of Tata Consultancy Services, Infosys, and Tech Mahindra — companies that count the US as their largest revenue market.

Shares of TCS dropped as much as 3.4%, Infosys slid 3.9%, and Tech Mahindra tumbled 6.5%, marking one of the sharpest selloffs in months.

The selloff underscores deeper worries. Analysts warn the higher costs may wipe out profitability per H-1B employee, forcing a pivot toward costlier local hiring, subcontracting, and offshoring.

Profit margins could shrink by as much as 13%, while growth faces pressure from rising wages, structural changes, and mounting competition from AI.

Some firms, such as HCL Technologies and Infosys, which already rely less on visa-dependent staff, may weather the disruption better. But for companies still tied closely to the H-1B model, the brunt of the changes is expected to hit starting in fiscal 2027.

JPMorgan said the relative price of hiring H-1B workers will rise sharply, likely driving outsourcing giants to increase offshoring to India and substitute visa hires with local staff in the US. That shift could erode the very cost advantages that made India’s IT model dominant for decades.

The blow lands at a fragile moment. India’s $250 billion IT services industry is already reeling from weak quarterly earnings, cost-cutting by major clients, and mounting layoffs. A sector index has shed more than 15% this year, a sharp contrast to the 7% gain in the benchmark NSE Nifty 50.

For now, investors are bracing for a long squeeze on India’s IT majors as Trump’s policy forces a painful reset of their decades-old playbook.

- With inputs from Agencies