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‘It is good to have the H1-B visa option but if tomorrow things happen to change, it is not the end of the world situation.’
Kindly note that this illustration generated using ChatGPT has only been posted for representational purposes.
The Indian information technology services industry, already grappling with the twin pressures of slowing growth and the disruptive rise of artificial intelligence, is staring at a fresh challenge — tightening US visa norms.
The latest warning has come from US Commerce Secretary Howard Lutnick, who has called for an overhaul of the visa programme.
In an interview with Fox News, Lutnick said he was involved in revamping the H-1B visa system.
‘We’re going to change that programme because that’s terrible, right?
‘We’re going to change the green card… That’s the gold card that’s coming.
‘And that’s when we’re going to start picking the best people to come into this country.
‘It’s time for that to change,’ he said.
According to Lutnick, an average green card recipient earns $66,000 a year, compared with $75,000 for an average American worker.
‘It’s like picking the bottom core,’ he remarked.
India’s tech sector is expected to be at $270 billion in size in 2025-2026 (FY26), of which IT services is likely to account for more than $137 billion.
A significant change in the visa programme will be a huge concern, as it has benefited the most from the H1-B visa system.
The US Citizenship and Immigration Services has received enough petitions to reach the Congressionally mandated 65,000 H-1B visa regular cap and the 20,000 H-1B visa US advanced degree exemption, known as the master’s cap, for FY26.
US immigration data says that Indian nationals have accounted for over 70 per cent of the new H1-B allocations annually.
Industry players and senior executives, who have been in a wait-and-watch mode since US President Donald Trump came back to power, believe that the industry has become much bigger to get rattled by the visa issue.
“It is good to have the H1-B visa option but if tomorrow things happen to change, it is not the end of the world situation,” said a large IT services firm senior executive who has moved to an advisory role.
“For the industry this is not about immigration, this is about ‘talent mobility’. Tomorrow if there is a project and it needs to be delivered, then we need to move people and get them back,” the executive explained.
“The industry is at a much mature level, where such measures will have some impact but will not be a setback,” the executive added.
Hansa Iyengar, practice leader of BFS and IT services at HfS Research, said the new merit-based system will place importance on high-skilled workers rather than on low-cost roles.
“This trend has been accelerating for several years now. System integrators will have to file at higher wage levels, lean more on L-1 and STEM-OPT where applicable and localise US hiring, and expand nearshore centres,” Iyengar said.
Most IT services providers, she said, have between 50 per cent and 70 per cent of non-visa-reliant onsite staff, which is likely to pick up speed.
“Another major impact will be an accelerated shift towards AI and automation to reduce dependence on people-heavy models. Expect greater investments in AI-first solutions to support services,” Iyengar added.
Players said that the major impact of such a shift will be on margins due to rising cost, slight delay in rampups, and project execution due to inability to get skills.
Moreover, the impact could be more on smaller IT players than their larger peers.
“Even after two-to-three decades, I can confidently say that H1-B has been used as a skill filler. Having said that, we are ‘worried’ because rules are changing overnight. There is no system anymore,” said another senior executive.
A senior analyst, on the condition of anonymity, said that the comments are not new.
“The dependency on visas has gone down over several years. The impact will be delayed in project rampups,” he added.
Additionally, players also highlighted that for the larger players, the focus moved to local hiring a long time back.
Players such as TCS, Infosys, and Wipro have had their campus hiring programmes for US hiring as well.
According to industry sources, TCS’s total workforce in the US could be around 50,000, over 50 per cent of which is local hire.
TCS Pace Ports, which the firm has created, are investments in local markets to tap into innovation and skillsets from countries such as the US, UK, Europe, and Japan.
TCS Pace Ports are a global network of innovation hubs and co-innovation centres established to drive digital transformation and innovation for their clients.
In its FY25 annual report, Infosys also highlights such initiatives.
‘With the objective of creating differentiated talent pools and ecosystems in our markets, we made significant investments in expanding our local workforce in the US, UK, Europe, Japan, China, Canada and Australia. We established innovation hubs, near-shore centres and digital design studios across geographies.
‘Further, we expanded our university and community college partnerships in all these regions to aid internships, recruitment, training and joint research,’ Infosys said.
Similarly, Wipro in its annual report also mentions its strategy of hiring local talent in critical geographies and strategic locations along with a dedicated team that manages mobility, ensures minimal impact on operations resulting from any protectionist policies by a country.
‘We currently have sufficient personnel with valid non-immigrant worker visas, and have increased hiring of local employees in the US to continue services to clients.
‘However, since a large part of our business centres is around the US, changes to US immigration laws could make it more difficult to obtain the required non-immigrant work authorisations for our employees that allow us to compete for and provide timely and cost-effective services to our clients in the US, which, in turn, could affect our revenues and operating profitability,’ Wipro said in its FY25 annual report.
Visa squeeze
- Green card recipients earn less than average American workers
- Indians account for over 70% of new H-1B visas annually
- Industry views visa issue as talent mobility, not immigration
- Smaller IT players likely to face more impact than larger peers
- Larger firms already focusing on local hiring in US
Feature Presentation: Ashish Narsale/Rediff
