On Friday, US President Donald Trump signed an executive order sharply increasing fees for each foreign worker on an H-1B visa to $100,000 from about $1,000. Though the administration clarified later that this would be a one-time fee for future visas and would not affect existing visas or renewals, market sentiments have soured towards the sector.
Apart from IT, the Trump measure casts a shadow over healthcare workers and Indian students with US job offers, among others. Confusion over the visa rules led to a scramble for flights to the US. For the tech sector in particular, the development comes at a time when it has lost its safe-haven status, and shares of IT firms have lagged the benchmark Nifty index.
Defensive no more
Ashwani Shami, executive vice-president and portfolio manager at Omniscience Capital, noted that the Indian IT sector is no longer the “defensive bet” it was 15 years ago. His firm fully exited its IT stock holdings in January due to low growth visibility and uncertainty around tariffs, which coincided with foreign technology companies putting a pause on IT spending. The latest development, Shami says, only makes the future more uncertain.
While large IT companies may not react hastily, smaller firms are expected to struggle more to absorb the increased costs. Shami believes larger players might either absorb the costs or cut jobs to manage the increase.
The Nifty IT index has fallen nearly 16% in 2025, a stark contrast to the Nifty’s 7% gain over the same period. Oracle Financial Services has been the biggest laggard in the IT index, down 29.5%, followed by HCL Technologies, which dropped 23.2%, according to Bloomberg data.
Impact on US Revenue
Madhavi Arora, lead economist at Emkay Global Financial Services, said that high-touch, client-facing roles like consulting may face more restrictions, potentially slowing US revenue growth. Given that the US accounts for 55% to 60% of India’s IT export market, a reduced on-site presence could hurt deal conversions or delay project ramp-ups.
Arora noted that while the near-term impact on net exports and margins is expected to be limited, firms may face margin compression or could pass the costs to clients, which would risk their competitiveness.
Larger IT firms are in a stronger position due to their reduced reliance on H-1B visas, which now account for only 20% to 50% of their US operations. This shift is a result of increased local hiring in the US, greater use of US delivery centres, automation, and subcontracting models.
Other sectors
While the tech sector accounts for the majority of H-1B visas, healthcare is another. India is the top source of immigrant doctors in the US, with one in five immigrant doctors in the US of Indian-origin. At 176,000, Indians made up 7% of the total immigrant healthcare professionals in the US in 2024.
The development surprise may also ruin the American dream for Indian students who have secured pre-placement offers in the US, who may find prospective employers unwilling to foot the new costs. PPOs are a key hiring tool for companies, allowing them to secure their top interns as full-time employees before the official campus placement season begins. Besides the latest Trump order, a US bill which seeks to shrink optional practical training, raise salary minimums for work visas, and sharply limit the ability of US employers and universities to secure foreign STEM talent have darkened the mood.
Travel aggregator MakeMyTrip pointed to a jump in last-minute bookings to the US since Saturday morning, something atypical for a long-haul segment. Airfares from Mumbai to San Francisco have risen, Cleartrip said.
A Shifting Stance
Sachin Jain, lead Analyst at Trigen Wealth, said that since the $100,000 charge is likely a one-time cost, the overall impact may not be as severe as initially feared. However, he cautioned that larger IT firms, which previously kept employees on the bench during slow project cycles, may now consider layoffs to reduce costs. Jain also pointed out that Trump has a history of shifting stances, and the market should closely watch for any further clarifications or changes.
Overall, Jain believes the outlook for IT companies has become less appealing. Slower growth for US businesses would likely lead to cuts in IT spending, which could result in delayed or cancelled new projects.
