On Monday, September 22, 2025, shares of major Indian IT companies, including Tech Mahindra, TCS (Tata Consultancy Services), Infosys, and Wipro, experienced a significant drop of up to 6%. This downturn was triggered by the announcement of a substantial increase in H-1B visa fees by the U.S. government. The policy change, spearheaded by the Trump administration, levies a $100,000 fee for new H-1B visa applications, a move perceived as a blow to Indian software exporters.

The Nifty IT index also reflected this downturn, dropping over 3%. Tech Mahindra shares saw the steepest decline, falling over 5% to a low of Rs 1,453. Infosys and TCS also experienced significant drops, slipping to Rs 1,482 and Rs 3,065 per share, respectively. Other IT companies like HCLTech, Coforge, and Mphasis also faced declines.

The market's negative reaction is attributed to the Indian IT sector's considerable reliance on H-1B visas. Approximately 60-70% of these visas are granted to Indian nationals, primarily engineers deployed by companies like Infosys, TCS, and Wipro for projects at client sites in the U.S.. This on-site presence has been a cornerstone of their business model, with many American clients preferring engineers on the ground, and contracts often structured around significant on-site billing.

The increased visa costs are expected to raise deployment expenses and potentially squeeze profit margins, particularly in cost-sensitive areas such as application development and consulting. While the White House has clarified that the $100,000 fee applies only to new H-1B applications and not to renewals or re-entries, concerns remain about the ability of IT firms to fully pass these costs on to their clients.

Analysts suggest that Indian IT companies may need to adjust their strategies. This could involve shifting more work offshore to India, increasing local hiring in the U.S. at higher wages, or accelerating automation. Each of these approaches carries its own cost implications, contributing to investor unease.

While some costs may eventually be transferred to clients, the immediate impact on earnings appears unavoidable. According to Ponmudi R, CEO of Enrich Money, the H-1B shock has created "mild negativity". He noted that the higher visa fees would negatively affect Indian IT firms in the near term, increasing offshore deployment costs and requiring a shift towards onshore or domestic delivery models.

However, some experts suggest the impact may be limited, as the $100,000 fee only applies to new applications and is not an annual charge. Despite this clarification, the development is still expected to weigh on IT stocks, with concerns lingering about whether companies can fully pass the increased costs on to clients.

The Trump administration's move is seen as a continuation of its "Buy American and Hire American" policy, which previously led to increased restrictions and higher denial rates for H-1B visas. Data suggests a significant drop in H-1B approvals for companies like Infosys, TCS, and Wipro between FY15 and FY24.

Seema Srivastava, Senior Research Analyst at SMC Global Securities, believes that the U.S. government's decision will severely impact both Indian and U.S.-listed IT companies with significant U.S. operations. She notes that leading Indian IT firms rely on the H-1B program to provide skilled engineers for American client projects, and this fee hike will significantly raise costs and reduce their competitiveness.

The impact extends beyond Indian companies. U.S. tech giants like NVIDIA, Amazon, Tesla, Meta, and Alphabet are also expected to feel the effects in the long term. These companies may face a talent pool crisis and rising input costs as they potentially need to hire more expensive American tech workers.

The fall in stock prices on Monday reflects the market's immediate concerns about the impact of the H-1B visa fee hike on the profitability and business models of Indian IT companies. While the long-term consequences remain to be seen, the industry faces the challenge of adapting to a changing landscape in U.S. immigration policy.