H-1B Crackdown Pressures Indian IT Stocks

That shift is happening as the Trump administration launches its first major H-1B fraud investigation, with the Labor Department’s inspector general naming Cognizant among firms under scrutiny and issuing dozens of subpoenas. The probe targets alleged abuses in H-1B and PERM applications, raising the odds of tougher enforcement, slower visa processing and greater compliance costs for employers that depend on foreign talent.

The market has already started to reflect the pressure. Infosys shares on the US market have fallen to $11.50 from $19.79 in December, while Wipro has slid to $1.90 from $3.03 in January, underscoring investor concern that tighter visa enforcement could weigh on deployment of Indian engineers in the US and squeeze sentiment across the sector. Both stocks remain below their 200-day moving averages, a conventional technical indicator that suggests the downtrend is still intact.

The macro backdrop is mixed but not supportive enough to offset the policy risk. The US unemployment rate is forecast at 4.18% in July, near historic lows, while job openings were still running at 7.594 million in May, showing employers continue to need workers. That makes the visa crackdown especially important for investors: demand for skilled labor remains solid, but the route to supply is getting more constrained.

For Indian IT services firms, the near-term risk is not just lost mobility but higher operating friction, slower on-site staffing and potential margin pressure if they have to rely more on local hires in the US or keep more work in India. For investors, the key catalyst is whether the probe widens into broader enforcement or pushes companies to reprice their US exposure in coming quarters.