Indian information technology majors saw their shares slump on Monday after US President Donald Trump imposed a $100,000 fee on new H-1B visa applications, threatening to inflate costs and slow revenue growth in their biggest market.
The sector, which earns about 57 percent of its revenue from the US, has long gained from US work visa programmes and the outsourcing of software and business services – a contentious issue for American job-seekers competing with cheaper Indian labour.
The tech sub-index dropped nearly 3 percent and was the biggest loser on the day. It also dragged the benchmark Nifty 50 0.2 percent lower.
India was by far the largest beneficiary of H-1B visas last year, accounting for 71 percent of approved beneficiaries.
“Due to the near-term pressure on margins amid an already tough market, we believe this is sentimentally negative for the sector,” ICICI Direct, an online trading platform for ICICI Securities, said in a client note on Monday.
ICICI Securities estimated that Trump’s order could knock about 1 percentage point off profit margins and about 6 percent off earnings for IT firms, assuming they continue to hire Indians under the program.
Trump’s reshaping of the H-1B program represents his administration’s most high-profile effort to rework temporary employment visas.
