By T N Ashok
NEW YORK: Washington has not shut the American Dream to Indian engineers. It has made it slower, costlier and more insulting, and the industry’s answer is to move the job rather than the worker.
The US Labor Department suspended eight employers (Microsoft, Adobe, TCS, Infosys, Wipro, HCLTech, Cognizant and Capgemini) from PERM, the first step in employer-sponsored green cards, and will neither accept their new applications nor process pending ones. The announcement came on October 8 from Vice President JD Vance and Labour Secretary Keith Sonderling. PERM requires an employer to certify that no qualified American is available for a job. The department cites an investigation into alleged visa fraud. Microsoft president Brad Smith has rejected the allegations, and TCS says it will comply with any Labour Department directive.
Scope matters. This is eight named employers, not a nationwide halt. Existing H-1B visas are not cancelled. India’s Ministry of External Affairs called the terminology Vance used “deeply offensive” for its colonial connotations, after Vance described H-1B workers brought in by outsourcing firms as “indentured servants.” The ministry also stressed that PERM is distinct from the H-1B programme.
The cost falls on the worker mid-queue. An engineer at an affected firm who was counting on a sponsored green card now waits with no end date. Vance said the Microsoft suspension would last as long as it needs to. Immigration-law trackers note the Labor Department has published no written notice and has not named the regulation it relies on.
Separately, the Department of Homeland Security has proposed an additional $103,265 fee on every cap-subject H-1B petition, projecting about $8.8 billion a year. That covers the 85,000 lottery visas, including the 20,000 reserved for US master’s graduates. It is not yet in effect, and the next cap season begins in spring 2027. It follows a federal judge’s June ruling striking down an earlier $100,000 fee. The Cato Institute’s David Bier notes that the first fee cut filings by nearly 90 percent, and that the government told the court it did not raise revenue. DHS itself expects some employers to shift to L-1 intracompany transfers.
For families in Coimbatore, Indore or Thrissur who financed an engineering degree priced on a US exit, the arithmetic is changing. But the services-firm route was already narrowing. The National Foundation for American Policy found the top seven Indian IT firms won just 4,573 new H-1B approvals in FY2025, 37 percent fewer than the year before and 70 percent below FY2015. Whether graduates now pivot to Canada, Germany or Australia is plausible but not yet measured. The first evidence will be application numbers, not anecdotes.
The industry is projecting calm. TCS says its PERM filings stayed in single digits over two years and that it intends to hire 15,000 more people in the US over five years. Its shares rallied about 5 percent, and the top five IT stocks added Rs 56,000 crore in market value. Unearth Insight’s Gaurav Vasu expects the suspension to pressure IT services margins before it dents revenue.
The real hedge is geographic. The Zinnov-Nasscom 2026 landscape counts 2,117 global capability centres across 3,728 units in India, employing about 2.36 million professionals and generating an estimated $98.4 billion. Nearly half of those set up since FY2021 had AI as a core focus from inception. For an American firm, the centre is an insurance policy. An engineer Mountain View cannot import can be hired in Hyderabad, Bengaluru or Pune, on the same roadmap, under the same employer.
Can Washington stop that? Not through immigration law, which governs who enters America, not where a company hires. The live threat is tax. Senator Bernie Moreno’s HIRE Act proposes a 25 percent tax on payments to foreign persons for services benefiting US consumers and bars companies from deducting them. Analysts warn that even captive centres may not be sheltered. It was referred to the Senate Finance Committee, and it remains a bill; no floor action had been confirmed at the time of writing.
That is why the Valley’s mood is closer to defiance than despair. Its AI ambitions lean on engineers from India and China. The NFAP notes that big American tech firms keep hiring large numbers of highly skilled workers, including foreign-born US graduates, to support AI investment. Lose the visa, keep the talent, change the postcode.
The verdict is uncomfortable for both capitals. Washington says it is defending American workers, yet each new barrier makes Bengaluru’s campus more attractive than Santa Clara’s, and the race it says it is running against Beijing is increasingly staffed from India. New Delhi should resist reading that as victory. A GCC job is a good job, but it can be taxed, regulated or relocated by someone else’s decision.
Three things to watch: the suspension grew from one company to eight in about a month, and officials say investigations continue, so more names may follow. DHS must finalise or abandon the fee. And the HIRE Act must either move or die. India’s leverage is real. So is its exposure. (IPA Service)
