Coforge, Tech Mahindra, other IT shares fall up to 1% as US scraps H-1B lottery

Coforge, Tech Mahindra, other IT shares fall up to 1% as US scraps H-1B lottery

Shares of IT firms fell marginally on December 24 as the Donald Trump administration  said it was replacing its longstanding lottery system for H-1B work visas with a new approach that prioritises skilled, higher-paid foreign workers.

Under the new framework, visas will no longer be allocated purely through random selection, said US Department of Homeland Security. Instead, applications will be weighted in a way that increases the likelihood of approval for foreign professionals offered higher wages and roles requiring more advanced skills.

A press release announcing the new rule says it is “in line with other key changes the administration has made, such as the Presidential Proclamation that requires employers to pay an additional $100,000 per visa as a condition of eligibility.”

At 10:15 am on December 24, Nifty IT was trading 0.3% lower at 39,050 with Coforge, Tech Mahindra, Wipro leading the losses by falling 0.7%-1%.

Shares of Persistent Systems and Infosys also fell 0.5% each.

This is the second consecutive session of fall for IT shares after they rose for four straight sessions.

Historically, H-1B visas have been awarded through a lottery system. This year, Amazon was by far the top recipient, with more than 10,000 visas approved, followed by Tata Consultancy Services, Microsoft, Apple and Google. California has the highest concentration of H-1B workers.

The new system will “implement a weighted selection process that will increase the probability that H-1B visas are allocated to higher-skilled and higher-paid” foreign workers, according to Tuesday’s press release. It will go into effect Feb. 27, 2026, and will apply to the upcoming H-1B cap registration season.

Supporters of the H-1B program say it is an important pathway to hiring healthcare workers and educators. They say it drives innovation and economic growth in the U.S. and allows employers to fill jobs in specialized fields.

Critics argue that the visas often go to entry-level positions rather than senior roles requiring specialized skills. While the program is intended to prevent wage suppression or the displacement of U.S. workers, critics say companies can pay lower wages by classifying jobs at the lowest skill levels, even when the workers hired have more experience.

The number of new visas issued annually is capped at 65,000, plus an additional 20,000 for people with a master’s degree or higher.

What do brokerages say?

In the recent past, brokerages have weighed on the impact of the new H-1B visa system and said the impact on Indian IT companies could be limited.

CLSA said the hike applies only to new applications, not renewals or the overall H-1B stock, limiting the negative impact.

Worst-case hit of up to 6% to FY27 earnings of Indian IT companies under coverage, assuming the full burden of fresh applications is borne by them, the global brokerage said.

Motilal Oswal Financial Services said first impact os likely in FY27 petitions, as the H-1B lotteries and filings are run in the fourth quarter to the first quarter. Over the past decade, Indian IT vendors have reduced reliance on H-1B visas, and the order is likely to face legal challenges in US courts, the domestic brokerage said.

Nomura said worst-case impact is estimated at about 10-100 basis points on margins for its coverage universe.

Clients and IT service providers are expected to increase offshoring and automation to offset higher visa costs. And, growth in Global Capability Centres (GCCs) in India is likely to accelerate, the global brokerage said.