Indian IT's New Playbook: Why a US Green Card Ban Failed to Rattle Markets

The Core Issue: A Ban on Green Card Sponsorship

On October 8, 2026, the US Department of Labor suspended several of the world's largest IT firms from the Permanent Labour Certification Programme (PERM). The list included Indian giants Tata Consultancy Services (TCS), Infosys, Wipro, and HCL, alongside US tech firms Microsoft and Adobe. This action, announced by US Secretary of Labor Keith Sonderling, blocks these companies from initiating new Green Card applications for their employees. Given that the US market accounts for 50-60% of revenues for major Indian IT firms, this move was widely expected to trigger a sharp negative reaction in the Indian stock market.

The US Administration's Rationale

The US government framed the suspension as a measure to protect American jobs. Secretary Sonderling stated the action was taken to end "the fraud that has fuelled reliance on foreign labour," citing multiple active federal investigations. The administration alleges that the named firms have used the H-1B and PERM systems to undercut local wages. Vice President JD Vance asserted, "You cannot lay off American workers and then replace them with foreign indentured servants." To support this position, Sonderling provided data indicating that since 2009, the impacted companies had received over 230,000 H-1B visa approvals and over 100,000 permanent labour certifications. The suspension is authorized under federal regulations, specifically 20 CFR § 656.31, which permits debarment for findings of fraud or willful misrepresentation.

Why the Market Remained Unfazed

Contrary to expectations, the Nifty IT index closed 3% higher on October 9, 2026, with bellwether TCS surging 5.5%. This resilience stems from a multi-year strategic pivot by Indian IT firms that has insulated them from such regulatory shocks. The primary factor is a structural reduction in visa dependency. The traditional onshoring model has been progressively replaced by offshoring from India and nearshoring from centres in Mexico and Canada, a trend accelerated by the COVID-19 pandemic. This shift was further incentivized by rising visa costs, including a hypothetical $100,000 fee for new H-1B applications introduced in September 2025.