Tata Consultancy Services (TCS) will not be hiring new H-1B visa holders this financial year, according to CEO K Krithivasan. Instead, the company will concentrate on expanding its local workforce in the United States. This announcement signals a potential shift in the IT industry's visa hiring strategy.

Krithivasan stated that TCS already has a sufficient number of employees in the U.S. on H-1B visas. Currently, approximately 11,000 of TCS's 32,000 to 33,000 U.S. employees are H-1B visa holders. He also noted that TCS deploys fewer people than the number of H-1B visas approved each year. So far this financial year, TCS has used only about 500 H-1B visas. Krithivasan clarified that the 5,505 H-1B visas from last year includes renewals and amendments, not just fresh applications. Fresh H-1B approvals are closer to 1,000.

Regarding the renewal of existing H-1B visas, Krithivasan explained that the company's original plan was to rotate people on H-1B visas, bringing them back and replacing them with local workers. Decisions on renewals will be made at the appropriate time, with a focus on increasing local participation. L-1 visas serve specific purposes and are not intended to replace H-1B positions.

This strategy aligns with TCS's existing practice of operating with a high percentage of local associates in regions like Latin America, the Middle East, and Asia-Pacific. New AI-based projects require closer collaboration with clients, making local hires more critical. Krithivasan emphasized the need for diverse skill sets beyond pure engineering or technology skills. TCS will continue to expand its local workforce in all geographies, particularly in the U.S. and Europe.

According to M. Dinesh, a consultancy manager in Hyderabad, other major corporations like Amazon, Cognizant, and Microsoft may follow TCS's lead. These companies may use L-1 visas for on-site transfers instead of paying approximately $100,000 per H-1B applicant. This could reduce new H-1B demand and accelerate the transition to L-1 visa routes for staffing U.S. operations.

The move underscores the shifting dynamics in the Indian IT industry's largest overseas market. For decades, companies like TCS and Infosys relied on H-1B visas to place engineers in client-facing roles. However, with rising regulatory costs in the U.S. and a growing emphasis on AI-enabled services, the strategy is shifting towards local hiring and global reskilling.

Krithivasan explained that TCS's strategy rests on five pillars: transforming internal operations, enhancing client services, upgrading workforce capabilities, using AI to disrupt value chains, and deepening participation in the broader ecosystem. TCS has announced a nearly $7 billion investment in AI data centers globally, with the goal of becoming the world's largest AI-led services company. These new AI data centers will enable TCS to provide end-to-end AI services, including cloud infrastructure, model training, and inferencing. AI is now integrated into nearly all TCS projects.

The announcement comes amid a muted demand environment for IT services, with weak client sentiment and restrained discretionary spending limiting growth. TCS recently implemented a 2% headcount reduction, handling the process with compassion and care, offering fair severance to affected employees, and keeping the broader workforce informed of the strategic rationale. However, TCS is creating 5,000 new jobs in the UK over the next three years.

TCS is also investing in talent development through initiatives like 'Partnering for Skills', which aims to reskill over 12,000 people for STEM-related roles. Additionally, TCS is launching an AI Experience Zone and Design Studio in London to foster innovation and client collaboration.