Washington took direct aim at India’s IT giants this week, and Dalal Street barely flinched. On Thursday, 8 October, US Labour Secretary Keith Sonderling announced that six of the world’s largest IT outsourcing firms (TCS, Infosys, Wipro, HCL Technologies, Cognizant and Capgemini) had been suspended from the Permanent Labor Certification (PERM) programme.
The headlines wrote themselves: a US crackdown on Indian IT. Vice President JD Vance added fuel, accusing large companies of abusing the H-1B system to replace American workers with cheaper foreign labour. Yet by Friday’s close, Indian IT stocks were higher, not lower.
To understand why, it helps to look at what was actually banned. It is a green-card freeze, not a visa ban
Much of the early commentary described this as a work-visa ban. It is not. PERM is the labour certification step that lets a company sponsor an employee, typically one already in the US on an H-1B, for permanent residency.
The suspension stops these six firms from starting that green-card journey for their staff. It does not cancel existing H-1B visas, and analysts note it does not suspend current H-1B employment. Engineers already working at client sites in New Jersey or Texas keep working. The pipeline that touches revenue today, people billing hours on US projects, is untouched.
How the market reacted
The first reaction came overnight in New York. Infosys and Wipro ADRs fell nearly 3%, hit by the PERM news on top of a cautious read of TCS’s September-quarter earnings.
Indian traders saw it differently on Friday. TCS rose 4.73% to ₹2,173.55 after reporting in-line results, adding about ₹31,857 crore to its market value. HCL Tech gained 2.7%, Wipro 2.65% and Tech Mahindra 1.76%. Together, the top five IT stocks added roughly ₹56,000 crore in market capitalisation, and the Nifty IT index climbed more than 3%.
Comments from NASSCOM and TCS that any impact would be limited helped steady nerves. The market treated the suspension as a sentiment hit, not an earnings hit.
Why the damage is limited
Indian IT has been preparing for this kind of shock for nearly a decade. Each round of US visa tightening, from 2017’s wage-floor proposals to the 2020 pandemic-era suspensions, pushed the big firms to hire more Americans locally and deliver more work from offshore centres in India.
The result shows up in the numbers. TCS’s PERM applications fell to 303 this year, down from 932 in 2024 and 505 in 2025. When a company files only a few hundred green-card applications a year, freezing that channel changes little for a business with lakhs of employees.
The industry also absorbed a bigger blow last year, when the US imposed a $100,000 fee on new H-1B applications. The Nifty IT index fell up to 4% on that news, and the sector has since adjusted its staffing models further.
The real risk is direction, not this decision
The suspension on its own is small. The concern is what it signals. A $100,000 H-1B fee last year, a green-card freeze this year, and a vice president openly targeting outsourcing firms point to a clear political direction.
The US remains the largest market for Indian IT, so policy in Washington matters more than almost anything else for these stocks. If the next step touches H-1B renewals, L-1 transfers or outsourcing contracts with US agencies, the costs would land on margins, not just sentiment. Higher local hiring is already more expensive than sending engineers on visas, and every new restriction narrows the room to manage that cost.
There is also a talent angle. A slower path to a green card makes US postings less attractive for senior Indian engineers, which could raise attrition and retention costs.
What investors should watch
For now, earnings matter more than headlines. Friday’s rally was driven by TCS’s results, and the coming weeks bring September-quarter numbers from Infosys, Wipro and HCL Tech. Deal wins, client spending on AI projects and margin guidance will move these stocks more than the PERM suspension.
Three policy signals are worth tracking:
Any change to H-1B renewals or the treatment of existing visa holders
- Restrictions on L-1 intra-company transfers
- Rules limiting outsourcing by US government agencies or contractors
The takeaway is simple. This week’s move is a warning shot, not a direct hit. Indian IT has de-risked enough to shrug it off, but the policy trend is one-way. Investors should price in a slow rise in US operating costs rather than a sudden shock.
This post is for information only and is not investment advice.
Sources - Business Today: US suspends IT giants from PERM programme
- Business Today: H-1B suspension impact and ADR reaction
- Business Today: TCS rallies 5%, IT stocks shrug off suspension
- Groww: Infosys stock news
- Business Standard: IT stocks after the H-1B fee hike
