H-1B visa shock: IT stocks tank up to 5%, Pg15.

Key Highlights:

• IT stocks fell by 2-5% after the US announced a steep hike in the H-1B visa fee.
• The new order mandates a $100,000 one-time fee for fresh H-1B applicants, a sharp increase from the previous range of $1,710 to $6,460.
• The Nifty IT index fell around 3%, wiping out nearly Rs 83,000 crore in market capitalisation.
• Experts believe the increased visa costs will disrupt the offshoring model that Indian firms depend on.

Detailed Insights:

• The H-1B visa is a non-immigrant visa that allows US employers to temporarily employ foreign workers in specialty occupations.
• Shares of Mphasis, LTIMindtree, Coforge, and Persistent Systems tumbled 4-5% each, while TCS, Infosys, Wipro and HCL Tech ended lower by 2-3%.
• Companies may be forced to accelerate their pivot toward domestic delivery centres or rely on nearshore hubs in markets such as Mexico, Canada, and Eastern Europe.
• The full financial impact would likely be felt from FY28, though strains may begin showing in the next H-1B lottery cycle starting the second half of FY27.
• Competition for on-site talent could intensify, driving wage inflation of about 10% and cutting profit margins by 100-200 bps.

Key Concepts Involved:

• H-1B Visa: A non-immigrant visa that allows US employers to temporarily employ foreign workers in specialty occupations.
• Offshoring: The practice of relocating business processes or production to lower-cost countries.
• Market Capitalization: The total value of a company's outstanding shares of stock.