Indian IT services companies are facing some headwinds due to recent shifts in US immigration and outsourcing policies, particularly the steep hike in H-1B visa fees and the proposed HIRE Act. While H-1B visa impact is likely to be limited, the proposed tax under HIRE Act, if implemented on outsourcing, may have much more material and long-lasting impact on IT sourcing from the US. However, the industry is expected to navigate these challenges with recalibration of delivery models, renegotiation of customer contracts, increased automation and focus on higher margin digital services.

Exhibit 1: Trend in geography-wise revenue mix for ICRA’s sample set companies

Source: Company Data, ICRA Research; ICRA sample set of five companies (HCL Technologies Ltd, Infosys Ltd, Tata Consultancy Services Ltd, Tech Mahindra Ltd and Wipro Ltd.)