US Move Against IT Firms Signals Protectionist Shift, Risks India’s Exports: GTRI

New Delhi: The US decision to suspend eight IT firms, including Tata, Infosys and Wipro, from a programme for foreign workers seeking green cards signals a more protectionist approach toward foreign technology professionals, with wider implications for India as the US accounts for 54.1 per cent of its software and IT-enabled services exports, think tank GTRI said on Friday.

It said India should prepare for possible restrictions extending beyond green card sponsorship to H-1B hiring, skilled worker mobility and outsourcing.

"The measure signals a more protectionist US approach to foreign technology workers...Indian firms should widen their export markets, strengthen delivery from India and expand local hiring where needed. India should also support AI and higher-value technology work to reduce its vulnerability to sudden US policy changes," Global Trade Research Initiative (GTRI) Founder Ajay Srivastava said.

The US on Thursday suspended eight IT firms, including Microsoft, Tata, Infosys and Wipro, from a programme that allows applications for green cards for foreign workers, contending that the practice has shut out Americans from the job market.

"The US green card sponsorship freeze is a warning for India's IT industry. It covers four leading Indian IT firms and disrupts the permanent residency plans of their employees, making long-term staffing in the US more uncertain," he said.

However, Srivastava said that the order does not itself stop H-1B hiring, and most Indian IT services are delivered from India. Indian professionals account for over 70 per cent of all approved H-1B petitions annually.

He said, "Immediate disruption to client projects may therefore be limited, even as firms face greater difficulty attracting and retaining staff for US roles".

He also said that the larger concern is India's dependence on a market that accounts for 54.1 per cent of its software and IT-enabled services exports.

On October 8, the US suspended eight technology companies from the Permanent Labour Certification Programme (PERM), freezing pending applications and blocking new ones. The companies are Tata Consultancy Services (TCS), Infosys, Wipro and HCLTech from India; Microsoft, Adobe and Cognizant from the US; and Capgemini from France.

The order is limited to PERM, a labour certification step used by employers to sponsor foreign workers, including H-1B holders, for green cards, or permanent residency.

"It does not itself ban H-1B applications, cancel existing H-1B status or block every green card route. These companies can continue applying for H-1B workers under the usual rules. H-1B applications follow a separate process involving a Labour Condition Application (LCA)," he said.

He noted that this should help limit disruption to IT projects, although the freeze will affect employees seeking permanent residency and firms' long-term staffing plans.

He also said that the freeze includes major Indian IT firms, but it has left out several major H-1B employers.

"Amazon, the largest visa recipient in the supplied ranking, was not included. Neither were Google, IBM, Meta, Apple, Intel or Accenture. Microsoft and Adobe's inclusion suggests that the action extends beyond outsourcing companies," he said.

The restrictions will affect Indian IT firms' US operations and Indian employees seeking permanent residency. However, the industry's reduced reliance on professionals working at US client locations may limit the wider impact.

India's software and IT-enabled services exports totalled USD 221.4 billion in 2025-26. The US accounted for USD 119.7 billion, or 54.1 per cent, making it India's largest market.

Globally, 91.7 per cent of these exports were delivered from India and 8.3 per cent by professionals working at overseas client locations. Applying this split to the US suggests that USD 109.8 billion was delivered from India and USD 9.9 billion through on-site work, less than 10 per cent of export earnings from the US.

"Only a portion of this on-site work would depend on employees seeking green cards through PERM. This estimate uses worldwide delivery shares, rather than US-specific figures," Srivastava said, adding that Indian firms have changed their business model over the years, delivering more work from India while expanding local hiring and training in the US.

Their US business now relies more on teams in India and local US employees, he said.

"This has reduced dependence; together with continued access to H-1B applications, it may help firms maintain project delivery despite the green-card sponsorship freeze," he added.

The US restrictions, according to the GTRI, could also encourage growth in India's Global Capability Centres (GCCs).

"Of the eight listed companies, Microsoft and Adobe operate GCCs in India. The other six -- TCS, Infosys, Wipro, HCL Tech, Cognizant and Capgemini -- provide IT and consulting services, and several help multinational companies set up and run GCCs," he said.

If the freeze makes retaining overseas talent in the US harder, companies may move more engineering work, global projects and specialised teams to their India centres. This could create jobs and expand India's role in technology development.