Hexaware Technologies has announced that recent changes to U.S. H1B visa regulations, including increased fees for new visa petitions, are expected to have minimal impact on the company's operations and finances.

Proactive Measures and Local Hiring Strategy

In a filing to the stock exchanges, Hexaware revealed that it has been strategically reducing its reliance on H1B visas over the past few years. The company disclosed that it did not submit any new applications under the H-1B cap in April, demonstrating its foresight in adapting to potential regulatory changes.

Focus on Local Talent and Operational Resilience

Gunjan Methi, Company Secretary & Compliance Officer of Hexaware Technologies, stated in the filing, "The Company continues to maintain a strong focus on hiring local talent. This focus on localization, together with the ability to adjust and evolve global talent deployment strategies in line with changing regulations, ensures continuity of client service and resilience in the operating model."

Financial Implications

Hexaware's management has assessed the situation and concluded that the new visa regulations are unlikely to have any material financial or operational impact on the company. This assessment is based on the company's current hiring practices and its adaptable global talent deployment strategies.

Market Response

The announcement is likely to reassure investors and stakeholders about Hexaware's ability to navigate changing regulatory landscapes without significant disruptions to its business model. The company's proactive approach to talent management and its emphasis on local hiring demonstrate its agility in responding to evolving market conditions.

Looking Ahead

As the IT services industry continues to face regulatory challenges in key markets, Hexaware's strategy of reducing dependency on H1B visas and focusing on local talent acquisition positions the company well for sustained growth and operational stability. The firm's ability to adjust its global talent deployment strategies in response to regulatory changes underscores its commitment to maintaining high-quality service delivery to its clients.

Hexaware Technologies remains confident in its ability to manage the impact of these regulatory changes effectively, ensuring minimal disruption to its operations and continued value creation for its stakeholders.

Hexaware Technologies , a prominent player in the Indian IT sector, has seen its stock rise over 5% in the past seven trading sessions since September 5, outperforming the ET Infotech index's 3% gain. This rally comes amidst a weaker rupee and expectations of potential US Federal Reserve rate cuts, which could potentially boost technology spending by US clients.

Market Performance and Drivers

The company's stock performance has been influenced by several factors:

1. Currency Fluctuations: A weaker rupee typically benefits Indian IT companies as they earn a significant portion of their revenue in foreign currencies, particularly US dollars.

2. US Federal Reserve Policy: Expectations of rate cuts by the US Federal Reserve have sparked optimism about increased technology spending by US clients, a key market for Indian IT firms.

Financial Performance

Hexaware Technologies reported modest growth in its recent financial results:

• Sequential revenue growth of 1.30% in constant currency during the June quarter
• Impact on growth due to reduced spending from a large client
• Challenges in the manufacturing and consumer vertical attributed to macroeconomic factors and tariff uncertainties
• Strong performance in the banking vertical with 13.80% sequential growth

Operational Improvements

The company has made strides in improving its operational efficiency:

• Increased offshore services share to 46.70%
• Improved employee utilization to 83.70%
• Expanded operating margin by 70 basis points sequentially to 17.30%

Analyst Outlook

Despite the recent stock rally, analysts have adjusted their growth estimates:

• JM Financial has reduced the 2026 revenue growth forecast to 7% from 9%
• Many analysts retain buy ratings on the stock
• The company maintains its revenue guidance

ESG Performance

In a recent development, Hexaware Technologies has demonstrated strong commitment to environmental, social, and governance (ESG) practices:

• S&P Global has assigned Hexaware an impressive ESG score of 83 out of 100
• The score is heavily weighted towards the Social Dimension, followed by Governance & Economic Dimension, and Environmental Dimension
• This high ESG rating reflects the company's dedication to sustainable and responsible business practices

Conclusion

Hexaware Technologies' recent stock performance, driven by macroeconomic factors and operational improvements, coupled with its strong ESG rating, positions the company as an interesting player in the Indian IT sector. While facing some challenges in specific verticals, the company's focus on efficiency and sustainable practices may contribute to its long-term resilience in a competitive market landscape.