Infosys, TCS to Wipro: IT stocks tumble up to 6% after Trump's H-1B visa fee increase. Should you buy?

IT stocks crashed on Monday, September 22, after US President Donald Trump signed a proclamation that will raise the fee for H1-B visas to a whopping $100,000 annually, marking the latest move by his administration to crack down on immigration.

Nifty IT fell over 3.5 per cent in intraday trade today, as against a half a per cent decline in the benchmark Nifty.

All Nifty IT constituents were trading in the red on Monday. Tech Mahindra share price was the top loser, down 5.8 per cent, followed by Mphasis and Persistent Systems, which fell over 5 per cent each. Meanwhile, TCS share price, Wipro share price, HCL Tech share price and Infosys share price, along with Coforge and LTIMindtree share prices, shed between 3-5 per cent each and Oracle Financial Services lost 1.4 per cent.

President Donald Trump has signed an executive order raising the H-1B visa application fee from USD 1,000 to USD 100,000 per applicant — a 100x increase that applies to new applications.

MOSL, in a recent note, stated that while the program’s structure remains unchanged, the first significant impact will likely be seen in FY27 petitions, as FY26 applications are already locked in. The steep increase is expected to influence decisions around on-site staffing and visa filings for Indian IT companies.

Implications of H-1B visa hike for Indian IT sector

MOSL highlighted that Indian IT vendors have reduced their dependence on H-1B visas over the last decade, driven by US localisation and increased local hiring. Currently, only about 20 per cent of employees are on-site, of which 20–30 per cent hold H-1B visas, translating to roughly 3–5 per cent of a typical vendor’s active workforce. MOSL emphasised that this limited exposure provides some buffer against the new fee structure.

According to MOSL, Big Tech companies like Google, Amazon, Microsoft, and Meta account for a larger share of fresh H-1B applications than Indian IT firms. Indian IT vendors, with their built-in localisation and subcontracting models, are relatively well-positioned to adjust.

MOSL believes Indian IT companies are likely to reduce new filings, relying instead on offshore delivery and local recruitment. While this may reduce on-site revenue, MOSL noted that offshore work is more profitable, and operating margins could improve even as top-line growth moderates. The order is also expected to face legal challenges in US courts, which could modify its impact.

Meanwhile, brokerage JM Financial said that in a scenario of increased local hiring without offsets, it estimates that the margin impact could be 15-50bps. In a more likely scenario of higher offshoring, the above impact could be completely negated. Financially, therefore, this is neutral, in our view, it added.

Top IT stocks to buy

MOSL said IT sector valuations remain reasonable, but a sector-wide re-rating will depend on a new technology cycle and earnings upgrades.

For large-cap exposure, MOSL prefers HCL Technologies and Tech Mahindra, highlighting TechM’s transformation under new leadership and improving execution in BFSI. HCL Tech is valued for its diversified, resilient portfolio. Among mid-caps, MOSL continues to favour Coforge and Hexaware, citing their strong performance in cost-focused market conditions.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.