Infosys, Wipro face H-1B rule risk

For Indian workers, the stakes are highest because they make up the largest share of H-1B recipients. Indian technology consultants, engineers and other specialists dominate the pipeline for US client work at firms such as Infosys and Wipro, where the visa is not just a labour channel but a business model enabler. A shorter runway after job loss would weaken bargaining power, increase the risk of forced departures and complicate transfers between projects, especially in a slower US hiring environment.

The policy also matters for India’s IT exporters because it adds friction to a sector already facing margin pressure from weaker discretionary spending, slower deal conversion and rising onshore hiring costs. Companies have spent years shifting more delivery offshore to reduce dependence on visas, but client demand in many industries still requires staff on site in the US. Any rule that makes visa retention more precarious can lift attrition, raise compliance costs and reduce flexibility in staffing American contracts.

Market reaction has already reflected the structural headwinds. Infosys shares have fallen to around $11.07 from a 52-week high near $19.79, while Wipro has dropped to about $1.69 from roughly $3.00. Both remain below their 200-day moving averages, with weak relative-strength readings and negative momentum indicators suggesting investors are still discounting a prolonged earnings recovery for India’s large-cap IT names. The move in the Indian vendors mirrors a broader investor concern that US policy risk could weigh on utilisation and deal execution before demand fully normalises.

The dollar has also remained firm enough to keep US wages and labour costs elevated for offshore vendors, even as Adalytica’s trade signals show neutral sentiment on the currency. That matters because Indian IT companies bill heavily in dollars but incur much of their cost base in rupees, so any rise in onshore staffing requirements can compress operating leverage even when currency translation helps reported revenue.

There is a potential bull case. Stricter visa rules could accelerate the shift toward nearshore and offshore delivery, benefiting firms that can automate more work and rely less on employee mobility. Over time, that may favour providers with deeper local hiring pools and stronger AI-enabled productivity gains. But the near-term bear case is clearer: if companies cannot move people as easily, service delivery becomes less efficient, client costs rise and project wins may be harder to staff quickly.

For investors, the key question is not whether the rule will kill the H-1B programme, but whether it makes the system less predictable at the margin. That uncertainty is enough to keep a lid on valuations for Indian IT services firms, particularly those with high exposure to US banking, consulting and technology clients. Any final rule, legal challenge or softened exemption for workers in transition will be watched closely for its impact on staffing costs, revenue conversion and the pace of margin recovery.