With Washington's new limits on employment-based green cards, the tech sector in India has found itself in a fresh battle.India's tech industry finds itself in a new wrangling with Washington over employment-based green cards. But the Trump administration's decision to limit foreign technology experts could end up having the opposite effect of what it aims to achieve: speeding up the transfer of U.S. tech operations to India and stunting the U.S.'s ability to recruit and retain foreign experts.

Eight top tech firms including Tata Consultancy Services, Infosys, Wipro, HCLTech, Cognizant, Capgemini, Microsoft and Adobe were barred from the Permanent Labor Certification (PERM) programme to recruit foreign workers in the US on October 8. The US Department of Labor has suspended new applications or processing of applications for the impacted employers while investigating for possible violations of the law.

This is a difference to observe. It is not the H-1B temporary work visa programme, but rather a key process that is part of the process for obtaining certain employment-based green cards. The current H-1B are not automatically terminated. However, the suspension adds a lot of uncertainty for professionals who are either working in the U.S. or awaiting permanent residency, especially Indians who have built careers and families in the country after years of residing in the U.S. and enjoying a successful career.

They limit competition from overseas workers and the possibility of exploitation of immigration programmes, the administration says. Denser monitoring is one of the many ways Washington is looking to emphasize domestic jobs, with Vice-President JD Vance and Labor Secretary Keith Sonderling leading the charge.

India has taken up the challenge. Narendra Modi's Ministry of External Affairs in New Delhi has cautioned against curbing the movement of skilled workers as it has a negative impact on the economic interest of both nations. It has also condemned Vance's use of the term "indentured servants" to refer to foreign workers, as offensive.

The economic impacts go far beyond immigration.

India's tech sector is around $315 billion, and is still firmly tied to U.S. corporate investments. Indian software services, cloud infrastructure, financial technology (fintech), cybersecurity and digital transformation are leading areas of business for the US. The cost of Indian engineers to deploy in America therefore has implications on the budgets of companies, project execution, and technology investments.

The numbers available show that the immediate corporate effect could be less than the political furor points to. For the October 2024 to September 2025 period, less than 1,400 of the nearly 117,849 PERM certification requests were made by the top six Indian IT services firms. This is the only type of immigration with which they have direct contact, which is relatively restricted.

TCS said earlier that it expects its staffing plans to be little impacted by the changes, as the company has been less reliant on PERM applications and more on hiring domestically in the US.

Cumulative restrictions have the bigger economic impact. Earlier this week, Washington announced that some new H-1B petitions will be $100,000 more, raising the cost of moving specialised foreign workers. In addition to uncertainty regarding permanent residency, such measures are increasingly creating high costs and difficulty in the traditional onsite/offshore model.

This makes a commercial calculation in America that politics can't beat. Once specialisation in the United States proves to be costlier, companies might shift more engineering, technology management and software development work to areas where they can find engineers who have the right skills at competitive prices.

Obviously India is one, and there are others.

Vineet Nayar, former HCLTech CEO, has said immigration restrictions have the potential to push more and more technology-related jobs to the American shores. His argument is representative of the structural change that is taking place in multinational corporations.

There are over 2,000 capability centres across India that are used for activities related to financial analytics, enterprise software, product engineering, research, and even AI. The operations are becoming more and more advanced in technology development and strategic decision making, increasingly shifting from the traditional back-office services.

The trend has been reinforced by recent corporate transactions. TCS has joined a partnership with Best Buy India's technology centre to create an AI-powered innovation operations. HCLTech made an acquisition of $10.5 million associated with Guardian Life's Indian business operations with a seven-year services agreement. The recent Mindsprint sale to Wipro, worth $386 million, and part of an eight-year transformation partnership with Olam, is one such example of technology companies's seeking long-term deals and niche expertise.

Immigration restrictions were not the reason for these transactions. They do show, however, that the companies from around the world already view India as a vital destination for complex technology operations.

There's a real opportunity, but there's a risk, too. In the past, India's IT sector has always grown at the same rate as number of employees and revenue. This relationship is undergoing a transformation thanks to artificial intelligence. The automated coding, software testing and enterprise workflow systems could help smaller engineering teams produce projects that would have needed significantly more manpower in the past.

This means that more technology deals to India may not necessarily mean more jobs. Advantages can be expected for companies specialized in high end engineering, AI integration, Cloud Architecture and Cyber Security, and pressure on pricing and profitability for traditional outsourcing with a high manpower intensity.

Washington has also a geopolitical contradiction in its policies. The U.S. seeks to increase domestic job creation, maintain its technological dominance and minimize reliance on foreign economies. But the added incentive of making it harder for foreign workers to come and stay in the United States could push companies to spread their more advanced technology functions to other countries.

For India, this is a chance to reap more economic benefits than to supply cheap engineering labour. The true prize lies with the intellectual property, product development, enterprise platforms and advanced technological capabilities.

But offshore expansion is not a given. American companies can choose to keep some of their sensitive functions in their own countries, or they can move some of their operations to other countries and automate them. Indian companies face additional challenges of increased compliance costs, geopolitical unpredictability and global competition.

The impact on individuals may be more direct than the impact on corporate bottom lines. Staff members who are nearing immigration deadlines can find themselves facing uncertain future for their families, complex immigration and career choices and delayed residency applications.

In the end, Washington's restrictions might accomplish some of their goals in specific areas but they can't overcome the economics of delivering technology around the world. American businesses will maintain their demand for qualified engineers, cost competitiveness and secure delivery.