Indian IT Stocks Surge Amid PERM Freeze, Yet Talent Exodus Threatens
BENGALURU/HYDERABAD: The U.S. government has suspended processing under the Permanent Labor Certification (PERM) program for certain Indian IT firms, potentially jeopardizing the pathways to permanent residency for eligible employees. Despite this development, stocks in the sector rallied on Friday, indicating limited market concern amid a declining reliance on H-1B visas. However, the suspension may lead to challenges in talent retention and hiring, as H-1B employees might seek opportunities with employers not affected by the suspension.
Vikram Shroff, a partner at AZB & Partners, stated that while the suspension could delay new applications, it should not hinder Indian IT companies’ ability to service U.S. clients. TCS reported that the PERM suspension is unlikely to impact its workforce strategy or customer engagements, as its applications under the program have been minimal in recent years. CEO K Krithivasan emphasized that the company’s business model focuses on a continuous movement of talent between onsite and offshore locations.
As of October last year, TCS employed around 11,000 H-1B workers within its U.S. workforce of approximately 32,000 to 33,000. Krithivasan noted that while some employees may wish to stay in the U.S. permanently, permanent residency has never been central to the company’s workforce strategy. TCS plans to hire an additional 15,000 employees in the U.S. over the next five years, with local employees already making up 50% of its U.S. workforce.
Microsoft indicated that 80% of its roughly 6,000 H-1B visa applications in the last fiscal year were for extending or changing the status of existing employees, with new hire applications accounting for just 1%. The company stated that it offers competitive compensation, ensuring that H-1B employees receive the same pay as other employees in comparable roles.
Cyrus D. Mehta, managing partner of a New York-based law firm, criticized the suspension as a misguided approach, arguing that hiring foreign workers does not necessarily displace American jobs. Stephen Yale-Loehr, a retired professor of immigration law, called the Department of Labor’s action illegal, suggesting that companies may pursue litigation, which could take time. David J. Bier from the Cato Institute described the current U.S. administration as particularly hostile to legal immigration.
Industry leaders noted that the suspension affecting eight major technology companies could accelerate the shift of high-value technology work to India, despite a limited immediate impact. Former HCL Technologies CEO Vineet Nayar pointed out that Indian IT companies accounted for fewer than 1,400 of the 117,849 PERM certifications issued last year, indicating that the direct impact of the suspension may be limited.
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