Opinion: Opinion | US' Visa Policies May End Up Backfiring On Its Own Tech Industry

The Trump administration's decision to suspend several major technology companies from the US Permanent Labor Certification (PERM) programme marks another consequential turn in Washington's increasingly restrictive approach to skilled immigration. The inclusion of Indian IT majors such as Infosys, Tata Consultancy Services (TCS), Wipro, and HCL Technologies, alongside Cognizant, Capgemini, Microsoft, and Adobe, underscores the widening intersection between immigration policy, domestic labour politics, and the strategic contest over technological competitiveness.

At one level, the move is being presented as an enforcement measure designed to protect American workers. At another, it raises a more fundamental question: can the United States continue to sustain its technological advantage while narrowing the pathways through which global talent enters and integrates into its economy?

PERM is an important step in the employer-sponsored employment-based green card process. It requires employers to demonstrate that qualified American workers are not available for a particular position before sponsoring a foreign national for permanent residency. The Department of Labor's reported decision to halt both new applications and pending cases involving the affected companies thus strikes at a critical stage in the transition from temporary employment to permanent settlement. Existing H-1B visas, however, have not been cancelled.

The Politics Of Protecting American Workers

The administration's justification rests on allegations of systemic abuse. Labour Secretary Keith Sonderling and Vice President JD Vance have argued that major outsourcing companies exploited the H-1B and PERM systems to substitute lower-paid foreign workers for American employees. The administration has cited the scale of foreign-worker applications and approvals associated with the companies, while Microsoft and Adobe have also been linked to active federal investigations.

The political logic is familiar. Immigration has long served as a powerful instrument of domestic mobilisation in American politics, and the Trump administration has made the prioritisation of American workers central to its economic nationalism. By targeting prominent technology companies, Washington is signalling that even strategically important industries will not be insulated from its broader immigration agenda.

Yet, the economic consequences of such a policy are less straightforward than its political appeal might suggest. The distinction between protecting domestic employment and constraining access to specialised talent is not always easy to maintain. Technology companies operate within globally integrated production networks, where software development, research, engineering, and product innovation depend on the movement of skills across national boundaries. Restrictions that address genuine labour-market distortions may be defensible; measures that indiscriminately constrain access to talent risk imposing costs on the very industries Washington seeks to strengthen.

Why Immediate Impact On Indian IT May Be Limited

For India's technology sector, the suspension is significant, but its immediate commercial consequences should not be overstated. Indian IT companies have spent years reducing their dependence on the traditional model of deploying large numbers of employees to client locations in the United States. Greater local recruitment, expanded offshore delivery, and the growing use of distributed teams have altered the economics of the sector.

Available industry figures suggest that the affected outsourcing firms accounted for less than 2% of PERM applications filed between October 2024 and September 2025. TCS, for instance, has reportedly maintained a very limited volume of recent PERM applications and indicated that the suspension would not materially alter its workforce strategy or client commitments. These trends suggest that the policy's immediate impact on revenues and service delivery may be modest. The reaction of Indian IT stocks, which rose following the announcement amid strong quarterly results, also indicates that investors were not treating the decision as an immediate threat to earnings.

But a narrow focus on near-term financial performance risks missing the larger strategic implications. The PERM pathway is not merely an administrative mechanism; it is part of the long-term employment bargain that helps global companies attract, retain, and deploy skilled professionals. Its disruption could affect employee morale, recruitment decisions, and the willingness of highly qualified workers to build long-term careers in the United States. The distinction, therefore, is between an immediate operational shock and a more gradual erosion of confidence. The former may be limited. The latter could prove more consequential.

The Human Cost

The most direct consequences will be felt by employees whose permanent residency applications have yet to begin or remain pending. A suspension prevents new PERM applications from proceeding and freezes affected cases, extending uncertainty for workers who may already have spent years navigating the American immigration system.

For Indian professionals, this uncertainty compounds an existing structural disadvantage. Indian nationals account for a dominant share of the employment-based green card backlog-estimated in some assessments at approximately 79% - because annual per-country limits interact with sustained demand for employment-based immigration. Waiting periods can extend for years and, in some categories, decades.

The distinction between temporary legal status and permanent residency is consequently more than a technical one. It shapes decisions about family settlement, career mobility, financial commitments, and long-term professional advancement. Although the suspension does not itself revoke existing H-1B status or undo previously approved stages, it further complicates the prospects of employees seeking a durable future in the United States.

This is where the policy's wider implications become visible. A technology ecosystem that depends on attracting global talent cannot assume that skilled workers will remain indefinitely committed to a destination where the rules governing permanent settlement are increasingly uncertain. Talent is mobile, and the international competition for it is intensifying.

An Opportunity For India

There is, paradoxically, a potential upside for India. Tighter American immigration rules may accelerate the redistribution of higher-value technology work towards India, particularly in research and development, product engineering, artificial intelligence, and other specialised domains.

Indian companies have increasingly moved beyond their traditional role as providers of cost-efficient IT services. Their expansion into global capability centres (GCCs), engineering hubs, and innovation-oriented operations reflects a broader transition towards activities with greater strategic and technological value. If the cost and uncertainty associated with deploying personnel to the United States increase, multinational companies may find it more attractive to locate additional functions in India. This possibility has also featured in responses from Indian industry and political leaders, including Karnataka's IT leadership. The underlying proposition is straightforward: if people cannot move as easily to where the work is located, more of the work may move to where the people are.

However, this outcome is not automatic. High-value technology functions depend on more than labour costs. They require research ecosystems, strong intellectual property protections, reliable infrastructure, regulatory predictability, and access to global customers. India must thus treat the changing American policy environment as an opportunity for domestic reform and industrial upgrading, rather than assume that restrictions imposed elsewhere will automatically generate gains at home. The strategic objective should be to make India an attractive destination for innovation in its own right, not merely a fallback location for activities that become more expensive in the United States.

The PERM suspension also needs to be situated within the broader trajectory of India-US relations. The second Trump administration's restrictive immigration agenda, including earlier measures to increase H-1B-related costs, has introduced another source of uncertainty into a relationship that has expanded substantially across technology, defence, trade, and strategic cooperation.

For India, the concern is not simply the treatment of individual workers. The United States remains the most important overseas market for Indian IT services, accounting historically for more than half of the sector's exports. Changes in American immigration policy can therefore affect the commercial environment in which one of India's most globally competitive industries operates. There is a broader concern that the restrictions could eventually extend beyond PERM to other aspects of skilled-worker mobility, H-1B recruitment, or outsourcing. Indian companies would be prudent to prepare for such possibilities by diversifying markets, strengthening offshore delivery, and investing more aggressively in advanced technology services.

Though both countries have strong incentives to sustain cooperation in emerging technologies, defence, and supply-chain resilience, repeated restrictions are gradually eroding societal goodwill. If Indian professionals increasingly perceive the United States as an unpredictable destination for long-term careers, the consequences may extend beyond individual companies to the broader networks of talent, investment, and innovation that have helped underpin bilateral technological cooperation.

The PERM suspension is best understood as part of a wider reconfiguration of the relationship between immigration, economic nationalism, and technological competitiveness in the United States. Its immediate effect on Indian IT revenues may be limited, given the industry's reduced reliance on traditional on-site staffing models. Its longer-term implications for talent retention, workforce planning, and confidence in American immigration policy are more difficult to dismiss.

For Washington, the challenge is to reconcile the legitimate objective of protecting domestic workers with the economic imperative of retaining access to global talent. For New Delhi, the priority should be to reduce excessive dependence on policy decisions made in Washington while strengthening India's position in higher-value technology activities.

This episode offers a reminder that strategic partnerships are increasingly shaped not only by defence agreements and diplomatic declarations, but also by the regulatory choices that determine where talent lives, where innovation takes place, and where the next generation of technological value is created. For India, the central question is no longer simply how to navigate America's immigration restrictions. It is whether the country can convert the uncertainty surrounding global talent mobility into a durable advantage in the international competition for technology, investment, and innovation.

(Harsh V Pant is Vice President for Studies at Observer Research Foundation, New Delhi)