The US Labor Department has effectively frozen new H-1B visa applications for Tata Consultancy Services, Infosys, Wipro, HCLTech, Cognizant, and Capgemini. The suspension cites active federal investigations, a move that immediately sent shockwaves through the sector before market open on Friday, October 9. This isn't just a procedural hiccup; it's a direct regulatory wall for the largest exporters of IT talent to the US.
The damage wasn't limited to visa policy. OpenAI disclosed an annualized revenue run-rate of $50 billion, a significant miss from the $68 billion figure market participants had priced in. That single data point wiped out optimism in the AI narrative that had kept Indian IT stocks from collapsing entirely. Nvidia shed 3%, Oracle dropped over 6%, and CoreWeave fell 8% on Thursday, dragging the entire tech complex down with it.
Tata Consultancy Services reported September quarter results after the bell, with deal wins landing at $9.6 billion. That sits squarely in the mid-point of the $9 billion to $10 billion range analysts projected. More critically, their AI vertical now contributes over 10% of the topline, a structural shift that matters more than the quarterly EPS. The Nifty IT index held up during the day but surrendered those gains by the close, ending just below flat.
NASSCOM pushed back hard, stating that Indian IT firms have drastically reduced reliance on H-1B visas and are expanding local hiring in the US. They noted that the number of employees transitioning from H-1B to permanent residency via the PERM process is already limited. This narrative is crucial for the valuation re-rating, but the immediate risk is the chilling effect on new project staffing.
Watch the ADRs closely. Infosys and Wipro ADRs dipped as much as 4% on the visa news but reversed course, with Infosys ending up 1.1% and Wipro flat. The market is clearly debating whether the OpenAI revenue miss is a sector-wide reset or a narrow AI-specific correction. If the H-1B freeze persists, the local hiring argument will be tested in real-time, not just in press releases.