Indian Tech Stocks Lose $10 Billion in Market Value on H-1B Hike

Link copied

Indian Tech Stocks Lose $10 Billion in Market Value on H-1B Hike.

stock :: 2025-09-22 :: source - bloomberg

By Alex Gabriel Simon

(Bloomberg) -- Indian information technology companies took a hit Monday on concern that the hefty increase in US visa fees will pressure earnings at the nation’s leading outsourcing firms.

Most Read from Bloomberg

The sector gauge dropped 3% in Mumbai, its worst day in over five months, erasing $10 billion in market value. Shares of Infosys Ltd., Tata Consultancy Services Ltd. and Tech Mahindra Ltd. were the biggest drags on the index.

President Donald Trump’s overhaul of the program, including a $100,000 fee for fresh applications, is the latest threat to India’s outsourcing companies whose operations have already hindered by muted demand. Companies including Tata Consultancy and Infosys derive a large chunk of revenue from the US, with overall exports exceeding $280 billion.

“This is likely to drive a change in the operating model, mainly toward higher off-shoring,” Jefferies Financial Group Inc. analysts Akshat Agarwal and Ayush Bansal wrote in a note. “Considering that the US government’s intent is to promote domestic employment, further measures to discourage outsourcing can’t be ruled out.”

India’s IT services sector has already taken a hit from disappointing earnings for the April-June quarter and layoff plans by bellwether TCS, as customers curtailed technology spending amid flaring trade tensions. The Nifty IT Index is down 18% this year, versus a 6.6% gain in the NSE Nifty 50 Index.

While most Indian software exporters have reduced their reliance on H-1B visas since Trump’s first term as president, the disruption to onsite operations poses a threat to near-term earnings. Jefferies estimates a 4% to 13% hit to consensus profit estimates.

Here’s what market watchers are saying:

Citi (strategists including Surendra Goyal)

Within IT companies, HCL Technologies and Infosys said earlier this year that 80% and 60%-plus of their US workforce is visa independent; companies with less US exposure will obviously be relatively less impacted
The impact will be largely visible starting in fiscal year 2027; some of it may be offset by higher outsourcing to India and lower outflow from education if Indian students refrain from studying abroad

JPMorgan (Toshi Jain)

The relative price of hiring workers on H1-B visas is expected to increase meaningfully
This is likely to force employers to (i) increase the ratio of off-shoring/near-shoring to onshoring and (ii) substitute H1B workers with local workers for onshored work

Jefferies (Akshat Agarwal)

The move will entirely offset EBIT per H-1B employee, driving a shift away from H-1B usage (7% to 12% of revenue) toward local hiring, subcontracting, and nearshoring or offshoring
The talent supply crunch will drive up onsite wages, which may drag profits by 4% to 13%. Growth may slow amid operating model shifts, macro pressures, and AI risk
Among large caps, we view Tata Consultancy and Infosys as well placed; among midcaps, Coforge Ltd.

Investec

Expects strong negative reaction on stocks, with midcaps more at risk than large caps
There will be an impact on margins, considering the sudden dislocation and the politics involved
Immigration advisor Fragomen suggests litigation to challenge the ban; any court order could be a reprieve that can squeeze shorts

Emkay (Madhavi Arora)

Services exports have finally been dragged into the ongoing global trade and tech war
Near-term impact on IT revenues may be limited, but if sustained, it may disturb Indian IT export companies’ traditional models
Indian vendors have been very adaptive in modifying their business models, but “we do see increase in risk premium impacting IT valuations”

--With assistance from Catherine Ngai, Ruth Carson, Ashutosh Joshi and Savio Shetty.

(Updates stock prices.)