IT Stocks Fall 2% as Trump Implements H-1B Visa Changes with $100,000 Fee
Indian IT companies face market pressure with stocks declining 2% following Trump's H-1B visa policy changes including wage-weighted selection from February 2026 and $100,000 fee approval. The new system favours higher-skilled workers over the current lottery method. Industry analysis estimates 6-7% margin impact, though companies' reduced visa dependence through workforce localisation may provide some protection against policy changes.
*this image is generated using AI for illustrative purposes only.
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:
| Wage Level | Current Share of Petitions | New Selection Weight |
|---|---|---|
| Level I (entry-level) | 35-40% | Lowest odds, no extra weight |
| Level II (qualified) | 35% | Standard weight |
| Level III (experienced) | 15-20% | Enhanced weight |
| Level IV (fully competent) | 10% or less | Highest weight, multiple entries |
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.
| Company | Stock Performance | Current H-1B Usage |
|---|---|---|
| Coforge | Nearly 2% decline (top loser) | Not disclosed |
| Mphasis | 1-2% lower | Limited dependence |
| Persistent Systems | 1-2% lower | Limited dependence |
| Wipro | 1-2% lower | ~250 visas over 5 years |
| Infosys | 1-2% lower | Minority of workforce |
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.
| Company | Localisation Strategy |
|---|---|
| TCS | ~500 associates on H-1B visas this financial year |
| Wipro | Over 80% US workforce localised |
| HCLTech | Reduced to few hundred employees per year |
| Tech Mahindra | Less than 1% global workforce on H-1B |
| LTIMindtree | 250-300 employees sent on H-1B in FY25 |
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.
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