Major Indian IT companies are showing a significant reduction in their reliance on H-1B visas, according to recent reports. This shift comes as new wage-weighted visa rules are set to take effect from the fiscal year 2027, prompting these firms to adapt their workforce strategies.

Declining H-1B Usage

The trend indicates a substantial decrease in H-1B visa applications from India's leading IT service providers. These companies are now focusing on building and utilizing localized US workforces, moving away from their previous strategy of sending Indian workers to the United States.

Factors Driving the Change

Several factors appear to be influencing this strategic shift:

New Visa Rules

The upcoming wage-weighted visa rules, scheduled to be implemented from FY2027, may be prompting companies to reevaluate their hiring and deployment strategies.

Local Talent Pool

Indian IT firms are increasingly tapping into the local US talent pool, potentially reducing the need for visa-dependent workers.

Cost Considerations

Employing local US workers might help companies avoid potential increased costs that could be associated with the new visa rules.

Long-term Strategy

This move suggests a proactive approach by Indian IT companies to ensure business continuity and reduce dependence on changing immigration policies.

Potential Impact on the IT Industry

This shift in workforce strategy could have implications for both Indian IT companies and the global tech industry:

• Skill Development: There may be an increased focus on upskilling local US employees to meet the specific needs of these IT giants.
• Business Model Evolution: Indian IT firms might need to adapt their operational models to accommodate a more localized workforce.
• Global Talent Distribution: This trend could lead to a different distribution of tech talent between India and the US.

Conclusion

The reported decline in H-1B visa usage by major Indian IT companies marks a shift in their operational strategies. As they move towards a more localized US workforce, the impact on the global IT services industry and cross-border talent mobility remains to be seen.

Indian IT services companies face immediate market pressure as shares fell up to 2% following the Trump administration's implementation of significant H-1B visa policy changes. The Department of Homeland Security announced on Tuesday that a new wage-weighted selection process will replace the current lottery system, while a federal judge approved the controversial $100,000.00 visa fee.

New H-1B Selection Framework Takes Effect

The revised US system fundamentally changes H-1B application processing by eliminating the random lottery method in favour of wage-weighted selections. The new process takes effect from February 27, 2026, and will apply starting with the financial year 2027 H-1B cap registration season. According to USCIS, the random process was previously abused for lower wage imports, and the changes aim to provide greater protection for American workers.

Under the new framework, each beneficiary's registration receives multiple entries based on wage levels:

Market Impact and Stock Performance

Shares of major Indian IT companies declined significantly on Wednesday, December 24, with the Nifty IT index experiencing broad-based selling pressure. The market reaction reflects investor concerns about the combined impact of policy changes and the substantial visa fee increase.

Financial Impact Assessment

US District Judge Beryl Howell ruled that President Trump's move to increase H-1B visa costs to $100,000.00 is lawful, adding significant financial pressure on IT companies. Industry analysis suggests the fee structure could substantially impact profit margins across the sector.

Sandip Agarwal, fund manager at Sowilo Investment Managers, previously estimated the overall impact on Indian IT margins at 6-7%. His analysis indicates that with top five Indian IT companies generating $80.00 billion in revenue and approximately 10,000 visas annually, the $1.00 billion additional cost represents a significant portion of the sector's $16.00 billion total margins.

Reduced Industry Dependence Provides Buffer

Despite market concerns, Indian IT companies have significantly reduced their H-1B visa dependence over recent years through strategic workforce transformation. Most firms now operate predominantly localised US workforces, which may help mitigate the policy impact.

The strategic shift towards local hiring, near-shore delivery centres, and increased offshore execution positions Indian IT companies more favourably than in previous policy cycles, though immediate market sentiment remains cautious as the new regulations take effect.