Coforge, Wipro and other tech stocks slide up to 2.5% amid US plans to revamp H-1B visa selection
Tech stocks in India saw a continued decline, with major companies experiencing losses due to rising H-1B visa fees and proposed changes prioritizing higher-wage applicants. The Nifty IT index decreased by 1.11%, marking a cumulative loss of 5% over four trading sessions.
Domestic tech stocks extended their losing streak to a fourth consecutive session on Wednesday, with Coforge, Wipro, and Tech Mahindra falling over 2.5%, pushing the Nifty IT index down 1.11% to a day’s low of 34,587 and resulting in a cumulative 5% decline over the past four trading sessions.
The IT stocks, which had taken a breather in recent weeks, failed to sustain those rallies as sentiment turned cautious after the White House increased the fee for new H-1B visas to USD 100,000 from USD 1,000, threatening higher costs and potential delays in deploying skilled workers to the US.
In further changes to the H-1B visa system, the U.S. Department of Homeland Security (DHS) has proposed amending the existing lottery process to give greater weight to applications from employers offering higher wages if annual visa requests exceed the 85,000 limit, signaling the White House intention to slow the inflow of foreign workers.
India's $283 billion IT sector, which derives about 57% of its revenue from the U.S., has long benefited from U.S. work visa programmes and the outsourcing of software and business services.
New proposals to H-1B visa system
In a notification released on Tuesday, the DHS said it intends to amend the random lottery system in favor of a weighted selection process that gives preference to higher-wage applications.
The change, along with the $100,000 H-1B visa fee hike announced by President Donald Trump last Friday, is expected to make it harder for entry-level talent, particularly Indians, to secure US work visas.
DHS has invited public comments on the proposal. Under the new system, the 85,000 visa cap remains, but applications from employers offering higher wages will receive greater preference if annual requests exceed the limit.
Selection odds will depend on wage level, with workers in the highest tier entering the lottery four times, while those in the lowest tier enter only once.
The $100,000 fee applies only to new applicants and not current H-1B holders. Following the announcement, tech giants such as Amazon and Meta reportedly advised their H-1B employees to remain in the US and avoid international travel, as per the media reports.
Wage-based selection would hurt IT companies: Analysts
The proposal to scrap the lottery system and introduce a wage-based selection process could hurt fresher hiring in particular, with startups and Indian IT firms seen as the most impacted, says ICICI Securities. The brokerage believes Indian IT companies will partially mitigate the impact through offshore hiring, local hiring, and nearshoring.
Another domestic brokerage firm, Elara Capital, said that IT companies have reduced their dependence on H-1B visas in recent years via local hiring and nearshoring, and the moderation in fresh H-1B visas is a testimony to this. It expects a further downtrend from the CY25 base in the coming years. “On-site presence is a client requirement, and we do not rule out negotiations by IT companies with clients to bear either partial or full incremental visa costs going forward,” the brokerage added.
There is also a possibility of more offshoring hereon, as only mission-critical resources are likely to opt for H-1B visas. The brokerage’s sensitivity analysis suggests a 5.8% and 8.4% worst-case impact on earnings for mid-cap and large-cap companies, respectively.
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