Top Indian IT stocks to watch amid H1B visa fee changes

Investing.com -- Investing.com -- The Indian IT sector faces fresh challenges as the U.S. government imposes a $100,000 fee on new H1B visa applications, effective September 21. The move will force IT firms to rethink talent deployment and could pressure profit margins. Jefferies estimates the fee would offset nearly the entire EBIT generated per employee over the visa period, prompting a likely reduction in H1B usage.

Still, the broker highlights certain companies as better positioned to adapt.

TCS
Jefferies views TCS as among the best placed large-cap IT firms to handle the policy shift. H1B employees account for an estimated 7–12% of revenue, but with the fee erasing profitability, companies will lean more on local hiring, subcontracting, and near/offshoring.

While U.S. wage inflation may squeeze profits by 4–13%, Jefferies expects TCS’s scale and client depth to cushion the impact, even as growth slows amid macro pressures and AI-related risks.

Infosys
Infosys also ranks favorably among large-cap peers. The firm’s onsite employees are typically billed at $150,000–$200,000 annually, with margins of about 10%, or $15,000–$20,000 EBIT per person.

With the new fee effectively wiping out 5–6 years of profits per H1B employee — close to the six-year visa limit — Infosys is likely to curb its reliance on H1B visas. Jefferies expects the company to leverage its strong offshore and delivery network as it adapts over the next four to five years, given that the fee does not apply to renewals.

Coforge
Among midcaps, Coforge is Jefferies’ preferred pick. The broker estimates H1B employees make up just 2–3% of the workforce across coverage, but because they generate 3–4x more revenue per person, they represent 7–12% of business that will need to be renegotiated over the next three to five years. Options include local hiring, subcontractors, near-shoring to Mexico or Canada, or offshoring to India. While revenue may hold steady, margins will come under pressure as U.S. wage costs climb 9–12%, which could cut overall profits by 4–13%.

As Indian IT faces operating model changes alongside tariff risks, weak demand, and looming AI-driven disruption, Jefferies recommends a selective approach. TCS and Infosys stand out among large-caps, while Coforge remains its top midcap pick.

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