NIFTY IT index crashes over 1,400 points on H-1B visa row; Here is what global investment firms say

Shares of Indian information technology (IT) companies were trading sharply lower on Monday, September 22. The measure of IT companies on the National Stock Exchange (NSE), NIFTY IT index, fell as much as 1,433 points or 3.92% to hit an intraday low of 35,145.10 after United States President Donald Trump on Friday signed a proclamation to raise the fee for H-1B visas to a $100,000 (₹88,00,000) annually from $1,200.

The visa fee hike comes as a shocker for the Indian IT companies as they roll out H-1B visas to their employees to work in US, their biggest market. According to reports, Indian migrant workers are the major beneficiary of the H-1B visa programme in US as they account for over 70% of H-1B visa holders.

Analysts say that the sharp hike in visa fees will adversely impact financials of Indian IT companies.

All 10 shares in the NIFTY IT index were trading lower dragged down by Tech Mahindra’s 3.67% fall. Persistent Systems, Mphasis, LTI Mindtree, Coforge, Tata Consultancy Services, Wipro, Infosys and HCL Technologies fell between 1.64-3.67%.

Measure of mid- and small-cap IT companies on the NSE, NIFTY MIDSMALL IT & TELECOM index, fell as much as 2.5% dragged down by selling pressure in shares such as Cyient, Zensar Technologies, Tata Tech, L&T Technology Services, KPIT Tech, Birlasoft and Sonata Software.

Here is what global investment firms say on H-1B visa impact on Indian IT companies

Global investment firms issued divergent views on the potential fallout of the US government’s decision to impose a steep $1,00,000 annual fee on new H-1B visa applications.

Jefferies warned that the proposed hike will entirely offset EBIT per H-1B employee, given that US visa-linked revenues contribute 7–12% to the topline of most Indian IT majors. The investment firm expects companies to increasingly shift away from the H-1B route and instead rely on local hiring, subcontracting and offshoring. However, such alternatives are likely to raise costs further.

“Talent supply crunch will drive up onsite wages, which could drag profits by 4–13%,” Jefferies noted. Among large-caps,

CLSA, however, suggested that the impact may be limited. It estimates up to a 6% hit to FY27 earnings for Indian IT firms under its coverage if the entire burden is borne by companies and not shared with clients. CLSA believes the actual impact will likely be lower, given efforts by firms to diversify talent pools.

It flagged LTIMindtree and Persistent Systems as most exposed while TCS is the least impacted player.

Nomura highlighted that around 20–40% of Indian IT firms’ US workforce is visa-dependent, with new applications accounting for nearly 17% of total filings. The one-time cost per filing of $1,00,000 could result in an EBIT margin impact of 11–99 basis points and EPS erosion of 0.5–6% if operating models remain unchanged.

Visa availability is also expected to shrink sharply from FY27 onwards, forcing a structural reduction in H-1B dependence.

Citi said the higher fees would inevitably raise the cost of doing business in the US, part of which could be passed on to clients. It expects a marked increase in nearshoring, offshoring, and global capability centres (GCCs) over the medium term. While the move could dent margins, Citi stressed that India’s overall IT competitiveness remains intact in the global outsourcing environment.

Nuvama argued that the industry has been reducing reliance on H-1B visas over the past eight years, and while the near-term disruption cannot be avoided, the longer-term impact may be cushioned.

“Higher offshoring is likely to offset much of the financial burden, though some near-term operational and financial volatility is inevitable,” it said. Overall, it expects the margin and earnings impact to be limited as companies adopt cost-efficient measures.