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The Trump administration's major increase in H-1B visa fees and proposal to replace the lottery with wage-based selection have rattled the Indian IT stocks. These measures of restricting foreign labor expenses and prioritizing higher-paying jobs will impact the hiring environment for Indian outsourcing companies that rely on the H-1B program.
India’s equity benchmarks have been under sustained pressure, logging four consecutive sessions of losses. On Wednesday, Nifty 50 closed at 25,056.9, while the Sensex also declined sharply.
In the last four sessions, Nifty has lost 1.4%, dragged by selling in IT counters amid worries over higher visa costs and global uncertainty.
On Thursday, markets are expected to open on a cautious note. Gift Nifty futures were trading at 25,071 points, suggesting a flat start for Nifty 50, close to Wednesday’s closing level. Analysts believe concerns over foreign outflows and US visa curbs will keep investors guarded in the near term.
Currently, Nifty 50 is down 30 points, trading at 25,025.
The Indian IT sector has fallen for three straight sessions, reflecting investor unease. The US has hiked H-1B application fee to an unprecedented $100,000, effective September 21, replacing the earlier range of $215 to $5,000.
This sharp rise is expected to significantly raise costs for Indian outsourcing firms, which traditionally file bulk visa applications to staff onsite projects.
While most industries brace for the fee shock, the White House has indicated that physicians and medical residents may be excluded from the new visa restrictions.
US medical groups had warned that restricting foreign healthcare professionals could worsen shortages in underserved regions. It remains unclear whether exemptions will apply industry-wide or be granted individually.
The Department of Homeland Security has suggested a wage-based scenario for the selection of H-1B's that would replace the lottery system. Prioritizing applicants with higher wages to "protect American workers."
Experts warn this could impact Indian IT companies, who files petitions for middle management positions, and lower prevailing wages compared to Big Tech.
Analysts expect the dual impact of higher fees and wage prioritization to accelerate the shift toward offshore delivery models. “Work may move back to India under flexible contracts as onsite staffing becomes less viable,” said Akshat Vaid of Everest Group. Large IT firms could face near-term margin pressures of 0.3-0.5%, but many have already been reducing their reliance on H-1B visas in recent years.
Also Read: H-1B Visa Fee Hike: Nasscom Predicts Minimal Impact as Indian IT Shifts to Local Hiring
The rising cost of visas, restrictions based on wages, and weak sentiment in the markets have put Indian IT in a difficult situation. While Big Tech is in a better position due to better financial positions and growing operations in India, outsourcing companies face the immediate task of balancing higher costs with offshore expansion. For broader markets, volatility may continue until there is a clearer direction on US visa policy and global fund flows.
