The Democratic Party’s sweeping victory in the US midterm elections could increase scrutiny of the Trump administration’s immigration restrictions and offer some relief to Indian IT services companies, although an immediate rollback of the policies remains unlikely.
The change in congressional control could also strengthen opposition to large-scale data centre investments, potentially slowing AI infrastructure expansion in the US. For Indian IT firms, this could create opportunities in cloud optimisation, application modernisation and managed services, even as restrictions on employee mobility and rising subcontracting costs continue to weigh on operations.
The new Congress will take office only in January 2027, while the Trump administration retains considerable executive authority over immigration policy and enforcement. The October 8 suspension of PERM applications involving eight technology companies, including TCS, Infosys, Wipro, HCLTech and Cognizant, is also unlikely to be reversed immediately.
PERM is the labour certification process for employment-based green cards and is distinct from the H-1B temporary work visa programme. The suspension does not invalidate existing H-1B visas.
“The structural response will remain greater local hiring, increased offshore delivery, greater use of global capability centres and AI-enabled productivity,” Biswajeet Mahapatra, principal analyst at Forrester, said.
“We may not see an immediate impact on H-1B visas or changes to the policy, but the hope is that the current policy is changed or challenged to become more supportive for IT services firms,” according to Namratha Dharshan, chief business leader, India Research, at ISG.
The other potential implication is for the US technology investment cycle. Growing concerns over electricity consumption, water usage and the impact of data centres on local communities could encourage greater regulatory scrutiny and delay some projects.
However, analysts cautioned against equating a slowdown in infrastructure construction with a decline in AI demand. “I would distinguish between a slowdown in data centre construction and a slowdown in demand for AI,” Achyuta Ghosh, research and advisory lead for India at HFS Research, said.
For Indian IT providers, delays could affect infrastructure deployment, cloud migration and implementation programmes dependent on additional computing capacity. But they could also create demand for capacity planning, hybrid cloud architecture, workload optimisation, FinOps and energy-efficient operations.
Mahapatra said the opportunity would increasingly lie in helping clients extract greater value from existing infrastructure rather than simply benefiting from fresh spending.
This could accelerate the shift towards services involving AI integration, orchestration, security, governance and ongoing management of enterprise AI systems. “For Indian IT companies, the opportunity will increasingly come from helping clients get better returns on their AI investments, rather than simply benefiting from more infrastructure spending,” Ghosh said.
Indian global capability centres could also benefit as companies look to leverage the country’s technology talent for enterprise AI development and regional workloads. HFS Research estimates that more than $45 billion of AI infrastructure is being built in India, potentially strengthening its position in the ecosystem.
Meanwhile, Dharshan said managed services could continue to provide resilience to Indian IT stocks amid volatility in investor sentiment towards AI. “From Covid, tariff changes to AI, managed services has continued to show resilience even though sectoral growth has been slow for some time,” she said.
Source: The Financial Express
