H1B Visa Restrictions Will Not Curtail Growth Of Indian IT Firms

Indian IT services companies are walking a tightrope at this point of time. Firstly, global demand environment has been tepid for the last two years owing to geopolitical tensions. This was further aggravated with the reciprocal trade tariffs imposed by the current US administration. Though the imposition of tariffs has been postponed for 90 days by President Donald Trump, the risks have not entirely gone. Experts opine that it is impossible for the US administration to negotiate trade deals with all its trading partners within the stipulated timeframe. Quite naturally, Indian IT firms are now staring at a prolonged period of uncertainty. Meanwhile, the Indo-US relationship seems to have hit a rough patch. Differences have come out between the two countries with regard to India’s action against Pakistan for supporting terror in the subcontinent. Many believe that this friction may adversely impact growth of India’s service sector. This is especially because of the likelihood of some strict measures that the US administration is to impose on the Indian IT industry.

Notably, the US Citizenship and Immigration Services (USCIS) earlier announced that it had selected 1,20,141 H-1B visa applications for the fiscal year 2026. This is the lowest number selected in five years. It is a fact that Trump’s political supporters are vehemently opposing H1B visa programme as they feel that such immigration programme is eating in jobs of locals. However, there are others in the Trump camp supporting the programme because of the talent shortage seen in the US. It is important to understand that while H1B visa programme helps the Indian IT firms to man operations in the US by deputing tech talent, it is used more by American technology giants than Indian IT companies. So, any disruption in the free movement of tech talent from India will impact American corporate houses more than those in India. Many Indian IT companies have learnt their lessons in the previous term of Trump, when he made life difficult for them. Many software services companies had to let go of projects because of lack of resources during that period.

Sensing such threats, Indian IT firms have aggressively localised in the last five years. Many companies have more than 70 per cent of their employees in the US, who are locals now. Therefore, any restriction on H1B visa programme will have minimal impact on the growth of Indian IT industry. Another development will also help in reducing the risks arising from restrictive policies from Trump administration. In recent years, many US firms have opened their technology captives (called as Global Capability Centres) in India. And Indian IT firms are engaging actively with these GCCs. Therefore, they are now able to execute project works for American corporations by deploying resources in the country. This significantly reduces the need for immigration of Indian talent to other countries. Given the uncertainty level seen in the American economy after Moody’s downgrade, Indian IT firms have to devise new strategies to accelerate growth in the coming quarters.