Industry experts warn that prolonged US immigration restrictions could increase staffing costs, complicate talent retention and force Indian IT firms to rethink their delivery models.
The United States’ suspension of major technology and IT services companies from its Permanent Labour Certification (PERM) programme has renewed concerns over talent retention, workforce costs and delivery models across the Indian IT industry. While the move does not itself cancel existing H-1B visas or approved green cards, it creates uncertainty for employees seeking permanent residency through employer sponsorship.
The companies named in the suspension include Capgemini, Cognizant, HCLTech, Infosys, Tata Consultancy Services (TCS), and Wipro, as well as Microsoft and Adobe. The US Department of Labour has alleged misuse of employment-based immigration programmes, raising concerns for employers and skilled professionals navigating the US immigration system.
PERM is a labour certification process employers generally must complete before sponsoring eligible foreign workers for employment-based green cards. It is distinct from the H-1B temporary work visa programme, which technology companies use to employ skilled professionals in the US.
The immediate impact is therefore not a blanket halt to IT services delivery or the cancellation of existing work visas. Instead, the uncertainty centres on employees with pending or planned permanent-residency applications, and on employers’ ability to retain experienced staff over the longer term.
Talent Retention and Delivery Costs Under Scrutiny
Jaspreet Singh, Partner at Grant Thornton Bharat, said the immediate priority for Indian IT companies would be to assess the scope and duration of the suspension while maintaining continuity of client delivery.
Companies may need to adjust workforce planning by hiring more locally in the US, selectively redeploying employees, and increasing use of offshore and nearshore delivery models. These changes could add complexity and cost, depending on how long the restrictions remain in place and how they affect individual employees.
The suspension may also influence employee decisions. Professionals whose long-term residency plans depend on employer-sponsored green cards could consider moving to organisations with alternative sponsorship options, potentially increasing attrition and replacement costs for affected firms.
Divam Sharma, CEO of Green Portfolio, described the development as “a sentiment shock more than an earnings shock”. He said existing contracts and delivery arrangements were unlikely to face an immediate material disruption, but that retention pressures, local hiring and subcontracting costs could affect margins over time.
Shashank Udupa, Founder of Vayu Capital, similarly identified talent retention as the principal concern. He said the suspension could prompt companies to rely more on US-based hiring or move additional work offshore, potentially affecting margins over time.
The distinction is important for an industry in which US clients account for a substantial share of demand. Although Indian IT services companies have expanded offshore delivery and local recruitment, uncertainty over immigration policy remains a workforce-planning risk.
Offshore Delivery and Local Hiring Could Gain Momentum
The suspension could accelerate changes already under way in the operating models of Indian technology services companies. Since the pandemic, providers have expanded distributed delivery, increased local recruitment in key markets and developed larger offshore teams to serve global clients.
NN Subramanian, Chief Operating Officer at Maveric Systems, said the uncertainty would require adjustments to workforce planning but was unlikely to weaken underlying demand for technology skills or investment in training. “The decision could encourage companies to expand offshore delivery while increasing local hiring in the US,” he said.
Subramanian added that the longer-term effects could extend beyond delivery operations, with global capability centres (GCCs) in India potentially taking on more senior leadership and decision-making responsibilities.
For Indian technology services providers, a greater reliance on offshore delivery could help reduce exposure to changes in US immigration rules. However, the extent of any shift will depend on client requirements, the nature of the work, data and security obligations, and the need for staff to be physically present at customer sites.
Local hiring in the US could help companies stay close to clients and meet contractual requirements, but it may increase labour costs. Companies will need to balance these considerations rather than assume offshore delivery can replace all onsite roles.
PanIIT Alumni India Calls for a Broader Look at Talent Mobility
The suspension has also prompted discussion about the longer-term implications of overseas career pathways for Indian engineers and technology professionals.
In a statement, PanIIT Alumni India said immigration policies should be applied fairly and transparently, while acknowledging the sovereign right of countries to determine their own immigration rules. It also rejected the characterisation of Indian professionals as “indentured servants”, pointing to their contributions to research, innovation, product development and job creation in the US.
Prabhat Kumar, IRS, Chairman of PanIIT Alumni India, said the episode highlighted the uncertainty associated with building a career around immigration status.“A visa was never a stable foundation for a career, and this week’s events prove it,” he said.
The organisation also called on the Indian technology diaspora to consider opportunities at home, arguing that India’s research ecosystem, deep-tech infrastructure and access to capital have evolved. Its position adds a talent-development dimension to the debate: immigration uncertainty could encourage some professionals to reassess where they build their careers, but attracting them back will depend on the availability of research opportunities, leadership roles and long-term investment in technology.
For India, the opportunity would extend beyond adding to the workforce of IT services companies. Retaining and attracting experienced engineers could also support domestic research and development, product innovation and the expansion of GCCs into higher-value technology and decision-making functions.
Companies Point to Local Hiring Strategies
CS said the suspension was not expected to affect its workforce strategy or customer engagements, citing the limited number of applications it had filed under the PERM programme in recent years.
In a statement on 9 October, the company said its PERM applications had been in single digits over the previous two years. It added that its US workforce strategy was based on local recruitment and campus hiring, supported by a presence across 31 offices and delivery centres in the country.
TCS also reiterated its plan to hire an additional 15,000 people in the US over the next five years. The company said it would comply with directives from the US Department of Labour.
Sonam Srivastava, Founder and CEO of Wright Research, also said the immediate effect on Indian IT export revenues was likely to be limited, given the industry’s reliance on offshore delivery and the distinction between PERM and H-1B visas. She identified compliance, employee retention and US hiring costs as areas to watch, particularly if scrutiny extends to other immigration routes.
The responses illustrate how local recruitment has become part of the industry’s strategy for managing immigration exposure. However, the impact is unlikely to be uniform across the sector: it will depend on each company’s use of PERM, the number of affected employees and the roles those employees perform.
Policy Uncertainty Remains the Key Risk
The duration and eventual scope of the suspension will determine its consequences for Indian IT services companies. A prolonged restriction could complicate permanent-residency plans for affected employees and increase pressure on employers to revise staffing, retention and recruitment strategies.
The industry will also be watching whether the action remains limited to PERM or is followed by changes to other employment-based immigration routes, including H-1B rules. Any broader restrictions could have more direct implications for companies that deploy specialist personnel to US client locations.
For now, the immediate concern is workforce continuity rather than a direct interruption to technology services or client contracts. Over the medium term, the suspension could reinforce a shift toward a combination of US-based hiring, offshore delivery, and stronger talent pipelines in India.
For the Indian IT sector, the challenge will be to manage immigration-related uncertainty while maintaining delivery commitments, controlling costs and retaining the technical expertise needed to support clients across markets. For India more broadly, the episode has renewed the question of whether domestic technology and research opportunities can attract and retain more of the skilled professionals whose careers have traditionally taken them overseas.
Originally published in Voice & Data
