In the brokerage's view, IT companies would further reduce dependence on the H-1B visa and increase localisation. In the medium term, ICICI Securities believes IT services companies should benefit from this move, as it would trigger higher offshoring to reduce costs.
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ICICI Securities Report
The $100,000 levy on onsite employees on H-1B visas would imply ~100 bps average headwind on margins and ~6% average impact on EPS, considering IT companies continue to employ new people on H-1B visas.
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Alternatively, if companies pivot towards hiring local US talent while maintaining a favourable employee pyramid (similar to their offshore model), the impact on margins is likely to remain negligible – consistent with the experience during the previous Trump regime.
In our view, IT companies would further reduce dependence on the H-1B visa and increase localisation.
In the medium term, we believe IT services companies should benefit from this move, as it would trigger higher offshoring to reduce costs.
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