Analysts see a greater impact on investor sentiment and long-term employee retention than on near-term revenue, as TCS, Infosys, Wipro and HCLTech navigate tighter US immigration rules and AI-led disruption

Indian information technology companies are unlikely to face a significant immediate financial impact from the United States' suspension of a key employment-based green-card programme, according to analysts. However, the move could increase uncertainty for Indian technology professionals working in the US, complicate long-term workforce planning and add pressure to operating costs across the sector.

The US action targets the Permanent Labor Certification programme, commonly known as PERM, an important step in the employment-based green-card process for many foreign workers. The suspension forms part of a broader US policy effort aimed at tightening immigration pathways for foreign-born individuals.

Companies exposed to the development include Tata Consultancy Services (TCS), Infosys, Wipro, HCLTech, Cognizant, Microsoft and Capgemini. Despite the potential long-term implications, analysts believe the immediate operational impact on Indian IT services companies may remain limited because their dependence on the PERM route has declined.

The development nevertheless adds another layer of uncertainty for an industry already dealing with slower technology spending, artificial intelligence-led changes in service delivery and higher immigration-related costs.

Why the PERM Suspension May Have a Limited Immediate Impact

The PERM programme is used by employers seeking employment-based permanent residency for eligible foreign workers. The process generally involves demonstrating that the employer has met applicable labour-market requirements before proceeding with the relevant immigration petition.

For Indian IT services companies, the suspension creates uncertainty around the long-term residency plans of certain US-based employees. However, the direct financial exposure may be limited because relatively few workers rely on this route compared with the total workforce employed by these companies.

ICICI Securities noted that Indian IT firms accounted for less than 2% of PERM applications filed between October 2024 and September 2025. The brokerage said the immediate concern was more closely linked to market sentiment and longer-term talent retention than to a direct reduction in revenue.

The limited share of applications suggests that the policy change may not materially disrupt the day-to-day delivery of existing client projects in the near term. Nevertheless, the effects could differ across companies depending on their employee demographics, US hiring strategies and exposure to workers pursuing permanent residency.

Indian IT Companies Have Reduced Their Dependence on H-1B Visas

India's technology services industry has gradually adjusted its US workforce model in response to changing immigration policies, visa costs and client requirements.

Nasscom, the industry association representing India's technology sector, said companies had significantly reduced their dependence on H-1B visas in recent years while expanding local hiring in the United States. It also noted that relatively few workers transition from H-1B status to permanent residency through PERM.

Greater local recruitment can reduce the need to move employees from India to the US for every client assignment. Companies may also use a combination of locally hired professionals, offshore delivery centres and subcontracting arrangements to meet customer requirements.

This shift offers some protection against immigration-related disruptions. However, maintaining a larger US-based workforce can involve higher salary and compliance costs compared with delivering a greater proportion of services from India.

The PERM suspension therefore may not create an immediate revenue shock, but it could influence the cost and availability of skilled employees over a longer period.

TCS Says Workforce Strategy and Client Engagements Remain Unaffected

Tata Consultancy Services, India's largest IT services exporter, said it did not expect the suspension to affect its workforce strategy or client engagements. The company cited single-digit PERM applications over the preceding two years.

TCS's position suggests that its direct exposure to the programme is limited. The company's global delivery model combines offshore operations with employees located near major customer markets, allowing it to serve international clients through multiple staffing arrangements.

However, the broader implications for the sector will depend on how US immigration policy develops. Even if a company has few employees directly affected by the PERM suspension, changes in visa availability, residency timelines or compliance requirements could influence future recruitment decisions.

For investors, company-specific disclosures will be important in distinguishing firms with limited exposure from those that may face greater workforce uncertainty.

Why Long-Term Employee Retention Is a Concern

The inability to progress through an employment-based permanent-residency route can complicate career and family planning for foreign professionals working in the US.

Some employees may reconsider their long-term employment arrangements if their immigration status remains uncertain. Others may seek opportunities with employers offering different immigration-support arrangements or consider relocating to another country.

For IT services companies, higher attrition among experienced employees could create additional recruitment, training and project-transition costs. Losing professionals with specialised technical expertise or established client relationships may also affect delivery continuity.

The impact is unlikely to be uniform across the industry. It will depend on the number of employees pursuing permanent residency, the availability of alternative immigration routes and the ability of employers to retain skilled workers.

The suspension may also make workforce planning more difficult for projects requiring employees to remain in the US for extended periods, although the extent of any disruption remains uncertain.

Rising Costs Could Put Pressure on Operating Margins

Bajaj Broking research head Sumit Singhania said the additional regulatory development adds another layer of uncertainty for Indian IT stocks, which are already facing pressure.

Companies may need to rely more heavily on locally hired US professionals and subcontractors if immigration restrictions become more challenging. This could increase labour and compliance costs, potentially weighing on margins if higher expenses cannot be offset through productivity gains or pricing.

The broader cost impact will depend on the extent to which companies change their staffing models and how much additional spending is required to maintain client service levels.

Large IT companies generally have diversified delivery networks and established local hiring capabilities, which may help them adapt. Smaller providers and businesses with more concentrated delivery models could face different challenges.

AI Disruption Adds to the Sector's Challenges

The green-card suspension comes at a difficult time for India's approximately $315 billion IT industry, which is also adjusting to the growing adoption of artificial intelligence.

AI tools are changing how software is developed, tested, maintained and supported. Automation can improve productivity and reduce the time required to complete certain tasks, but it can also change the volume and mix of services purchased by customers.

As clients increasingly seek measurable productivity gains, IT services companies must balance investment in new capabilities with pressure on traditional billing models. This can affect revenue growth, employee utilisation and margins.

The combination of immigration uncertainty and AI-led changes means companies must manage both workforce-location decisions and the skills required for future projects.

Firms that can expand their AI capabilities, improve delivery efficiency and retain specialised talent may be better positioned to protect profitability in this environment.

IT Stocks Face a Challenging Market Environment

According to the figures cited in the report, India's IT index had gained approximately 3.5% during Friday's session, supported by TCS following its stronger second-quarter results. The recovery came against a difficult year for the sector: IT stocks had fallen around 25%, compared with a 14% decline in the benchmark index.

The divergence reflects concerns about global technology spending, AI-led disruption, earnings visibility and the cost of delivering services across international markets.

The green-card suspension could influence investor sentiment even if its direct financial effect remains limited. Markets often react to regulatory uncertainty before its consequences become visible in quarterly results.

However, the day's gains also demonstrate that company-specific developments, including earnings performance, can outweigh broader sector concerns in the short term.

Investors should distinguish between temporary sentiment-driven movements and changes in long-term earnings expectations.

What Investors Should Monitor

The key indicators to watch include:

• Immigration policy developments: Further US announcements could change the outlook for employment-based residency and skilled-worker mobility.

• Employee retention: Attrition among US-based professionals may affect recruitment costs and delivery continuity.

• Local hiring costs: A greater dependence on US talent could influence operating margins.

• Client demand: Spending on digital transformation, cloud computing, cybersecurity and AI services will remain central to revenue growth.

• AI-led productivity: Companies' ability to use AI to improve delivery efficiency will be important for future profitability.

• Management commentary: Updates from TCS, Infosys, Wipro, HCLTech and Cognizant may provide greater clarity on workforce exposure and cost implications.

Market Outlook

The US green-card suspension appears to pose a limited immediate operational risk to Indian IT services companies, given their reduced dependence on the PERM programme and the industry's shift towards local hiring. The larger concerns relate to long-term employee retention, workforce planning and the potential for higher staffing and compliance costs.

For the sector, immigration policy is only one part of a broader challenge that includes AI-led disruption, uneven technology spending and pressure on traditional service models. Companies with diversified delivery networks, strong local recruitment capabilities and improving productivity may be better equipped to manage these risks.

Investors should avoid treating the suspension as an immediate earnings shock without evidence of a material impact on staffing or client delivery. Instead, attention should remain on quarterly revenue growth, operating margins, employee costs, AI-related business opportunities and management guidance.

The next phase of the story will depend on how US policy evolves and whether the uncertainty translates into measurable changes in hiring, attrition or project execution. Until greater clarity emerges, the development is likely to remain a sentiment and workforce-planning concern rather than a confirmed near-term threat to Indian IT companies' revenue.