US Green Card Suspension: Why Indian IT stocks remained resilient

Infosys, on Saturday said, that it does not expect the US government's suspension of its green card applications to have any major impact on its business.

TCS also said it expects no impact on its workforce plans or customer relationships, as it has filed very few applications under the programme in the past two years. Meanwhile, India's Ministry of External Affairs criticised the US move, saying Indian professionals are highly skilled and make important contributions to America's economy.

 Industry body Nasscom also pointed out that Indian IT companies have reduced their dependence on H-1B visas and are increasingly hiring American workers.

What exactly happened: the US government suspended eight major technology companies, TCS, Infosys, Wipro, HCLTech, Cognizant, Capgemini, Microsoft and Adobe from its Permanent Labour Certification (PERM) programme.

Many foreign IT professionals first move to the US on temporary work visas, such as H-1B. The PERM process is an important step that helps eligible workers apply for a green card, allowing them to live and work in the US permanently. 

Under the suspension, the US government will neither accept new PERM applications nor process pending ones involving these eight companies.

However, existing H-1B visas are not automatically cancelled.

The US government argues that these companies have used the programme at the expense of American workers, while Indian IT companies say their dependence on it has already fallen significantly.

How IT stocks reacted: Interestingly, Indian IT stocks rallied on Friday despite the announcement.

The Nifty IT index gained around 3%, led by TCS following its strong September-quarter results. 

But analysts aren't completely relaxed.

ICICI Securities warned that the suspension could hurt investor confidence in the near term. If the restrictions continue, companies may also find it harder to retain foreign employees in the US. 

And there's another concern, hiring more American workers or using local contractors could increase costs for Indian IT firms.