Major Indian IT companies, including TCS and Infosys, have been suspended from the US PERM labor certification program. However, firms have confirmed this will not materially impact operations, as they have already shifted toward local hiring. The Nifty IT index remains resilient, as companies signal that visa-dependent models are no longer central to their growth strategies.
The US Department of Labor has suspended eight major information technology firms, including industry leaders Tata Consultancy Services, Infosys, Wipro, HCLTech, Cognizant, and Capgemini, from the Permanent Labor Certification (PERM) program. This program is a required step for employees seeking employment-based green cards in the United States. While the news of a suspension can sound concerning, market reaction has been muted. Companies have formally informed Indian stock exchanges that they do not expect this development to have a material impact on their business operations or financial delivery.
Transition Away from Visa Dependence
The reason for the limited market impact is a long-standing shift in how Indian IT firms manage their US workforce. For several years, these companies have been actively reducing their reliance on the traditional visa-dependent hiring model. Industry data reflects this, showing that PERM certifications across thirteen major IT firms dropped to 607 in the first nine months of fiscal year 2026, compared to 1,670 in the previous fiscal year.
For example, Tata Consultancy Services recorded only two PERM certifications in the first nine months of the current fiscal year, down significantly from 505 in the full fiscal year 2025. This downward trend was in motion well before the current suspension, driven by a strategic move to hire more local talent directly within the United States. By building a larger on-site workforce, these firms have created a structural cushion against fluctuations in immigration policy.
Strategic and Operational Outlook
While this suspension does not affect existing H-1B visa status or validity, it creates a new layer of uncertainty for the industry. The primary focus for investors is how this might affect the long-term cost of doing business. If Indian IT firms are unable to offer a path to residency for their top-tier foreign employees, they may face challenges in retaining specialized talent. This could eventually lead to higher recruitment costs or potential wage inflation if firms must compete more aggressively for US-based staff.
Furthermore, while the current business model is resilient, the regulatory and political environment in the United States remains a key variable. Future immigration policy changes could introduce more friction, even if the current impact is manageable. The Nifty IT index has shown resilience following the news, buoyed by solid quarterly results, such as those recently reported by TCS.
Investors may monitor the management commentary in upcoming earnings calls for updates on hiring costs and any changes to the localization strategy. The key monitorable will be whether this suspension forces an acceleration in the cost of hiring local staff or if the current offshore-onshore balance remains stable enough to protect profit margins.