The US administration has suspended Microsoft, Adobe, and six major IT firms from the PERM program, a key pathway for permanent residency. This move follows allegations of H-1B visa abuse. While current work visas remain valid, the restriction creates uncertainty for talent retention and has led to a dip in Microsoft’s stock price.
Microsoft and several major technology companies, including Adobe and Indian IT giants like Infosys, Tata Consultancy Services, Wipro, and HCL Technologies, have been suspended from the Permanent Labor Certification (PERM) program by the US Department of Labor. This government action, initiated on October 8, 2026, blocks these companies from submitting new applications for permanent residency for their employees. Cognizant and Capgemini are also included in the restriction.
The administration’s decision follows ongoing federal investigations into allegations that these firms have used the H-1B visa program in ways that may disadvantage domestic workers. The PERM process is a critical step for companies wishing to sponsor foreign employees for permanent US residency (Green Card).
Microsoft’s Defense and Data
Microsoft has formally challenged the government's characterization of its hiring practices. In its defense, the company stated that approximately 80% of its H-1B visa filings last year were to extend or adjust the status of current staff members rather than to bring in new employees. The company also maintained that its wage structures are highly competitive within the tech sector. Microsoft argues that the administration’s focus on the program ignores the fact that new visa-sponsored hires make up a very small fraction of its total American workforce.
Impact on Employees and Operations
It is important for investors and employees to note what this suspension does not do. The order does not revoke existing H-1B visas or current work authorizations. Employees already in the country on H-1B visas can continue to work as usual. The primary impact is on the long-term pipeline for permanent residency, which is a key tool for global companies to retain top-tier talent over the long term.
Risks and Investor Monitorables
This development introduces new risks for the tech and IT services sector. First, the primary operational risk is the potential loss of skilled talent. If employees cannot start the path to permanent residency, they may choose to move to other firms or countries where the process is smoother.
Second, the regulatory friction increases the risk of higher compliance costs and potential legal battles. Markets have reacted with caution, as seen in the dip in Microsoft's share price following the announcement. Investors are now watching how this dispute affects the company’s ability to manage its global workforce, as well as the broader potential for increased regulatory scrutiny on other technology firms that rely on international labor. The ultimate impact will depend on how quickly the affected companies can resolve these investigations and restore their access to the PERM program.