Indian IT stocks fell sharply on Monday after the US announced a new $100,000 visa fee for H-1B applications. The fee applies to new applicants and is expected to raise costs for Indian companies operating in the US.
The Indian IT sector earns about 57% of its revenue from the US, making H-1B visas a key part of its workforce strategy. The tech sub-index fell nearly 3%, dragging the Nifty 50 down by 0.2%.
India was the largest beneficiary of H-1B visas last year, accounting for 71% of approvals. Analysts warn the new visa fee could reduce profit margins by around one percentage point and earnings by roughly 6% for IT companies relying on these visas.
ICICI Direct described the move as “sentimentally negative” for the sector, citing near-term pressure on margins. Jefferies called it a “$100,000 curveball” but noted it affects only new applications, giving firms time to adjust.
Industry experts predict Indian IT companies will rely less on H-1B visas, hire more workers locally in the US, and consider staffing in countries like Mexico and Canada. Nasscom said H-1B visas issued to major Indian IT firms have declined from nearly 15,000 in 2015 to just over 10,000 in 2024.
Among the top losers on Monday, Mphasis fell 4.4%, TCS and Infosys dropped about 3% each, and Wipro declined 2%. Analysts also noted ongoing challenges from geopolitical tensions, macroeconomic pressures, and structural concerns from GenAI.
The sector also faces potential changes from a proposed 25% tax on outsourcing payments and weak US revenue growth, as clients defer non-essential tech spending. Indian IT stocks have dropped 18% this year, compared with a 7.1% gain in the Nifty 50 index.
The new US visa fee adds further uncertainty for the Indian IT industry as companies adjust hiring strategies and costs while navigating global market challenges.
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