What US’ PERM Freeze Really Costs India’s IT Industry

This article was originally published in 360info under Creative Commons 4.0 International. Read the original article.

By Deepanshu Mohan

On October 8, 2026, the US Department of Labour decided to stop processing PERM labour-certification requests from eight technology firms, including Microsoft, Adobe, Cognizant, Infosys, Tata Consultancy Services, Wipro, HCL Technologies and Capgemini. The Department of Labor said it would neither accept new applications nor process pending applications involving the named companies. 

PERM, or Program Electronic Review Management, is the initial step in the employment-based green-card process for most immigrants applying under the EB-2 and EB-3 categories. In order to proceed to the next stage, employers are required to prove that they have tried to hire Americans for the jobs in question. 

The processing of the applications has been suspended in accordance with 20 CFR § 656.31(b), which allows for the temporary interruption of services if there are grounds to believe that fraud or wilful misrepresentation is involved.  

Notwithstanding the administration’s justification, it is important to study how allegations must not be confused with provided proof of fraudulent activity. Vice President JD Vance accused companies that employ people on H-1B visas of creating a caste of foreign indentured servants.  

On the heels of the H-1B controversy came reports of investigations into the J-1 visa program, which have seen the involvement of dozens of American universities. In the context of Vance’s comments on H-1B visas and intensified scrutiny of J-1, the latest development suggest that the debate over America’s immigration policy and the prospects of its labour market will continue to gain momentum. This would, in the meantime, systematically erode India’s IT service sector’s integrative loop with American companies and vice-versa.  

The stages of the H-1B-to-green-card process could therefore be described as entering the United States, living there as a worker, and eventually receiving permanent residency. Each of these possesses its own restrictions. 

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Successful applicants

Indian nationals comprise a significant part of successful H-1B applicants. A US Citizenship and Immigration Services’ FY2024 H-1B characteristics report says, Indians comprised 71 percent of successful applicants in 2024. 

The immigration system has also become more expensive and unpredictable: the $100,000 H-1B fine announced in September 2025 was later clarified by USCIS to be applicable only to petitions made after September 21, 2025, as a one-time payment rather than an annual renewal. 

This has become an IT programme. Infotech workers made up 32 percent of H-1B holders in fiscal 2003 and averaged over 65 percent across the last five fiscal years. H-1B status permits temporary employment, subject to immigration rules and the conditions of the petition. Workers may continue working lawfully while their green-card applications are delayed, provided their existing authorisation remains valid. 

PERM falls under the third category, which concerns the transition from being a temporary resident to receiving permanent residency. The suspension interrupts a stage of the process for affected applications, potentially delaying workers’ transition to permanent residency. Its consequences depend on the status of each application. 

The size of the employment-based immigration backlog explains why the PERM suspension impacts individual workers: its immediate relevance for corporate profits is limited.  

The Cato Institute estimated the US employment-based waiting list to contain approximately 1.8 million people in 2023, around 1.1 million of whom are Indians. This puts the portion of Indians in the queue at around 68 percent. The report estimated the time necessary to clear the backlog for Indian applicants to be up to 134 years with approximately 424,000 Indians dying before obtaining a visa.  

This might have more of an impact than it seems, as permanent residency is a significant factor in the worker’s life, affecting their decision-making and planning. Another obstacle in their employment-based residency application might disrupt their lives severely. 

Erosion of revenues

An RBI survey tracks an erosion in on-site revenues, from US$19 billion to US$18.4 billion. These are wages paid to staff members who work at client facilities overseas. The reduction implies that the traditional approach of sending numerous Indian professionals to work overseas is being de-emphasized relative to other approaches to technology services delivery. The larger industry trends confirm this shift.  

Nasscom data reveals that Indian IT revenue totalled $315 billion in FY2025-26, up 6.1 percent, with exports of $246 billion, up 5.6 percent. The industry employed some 5.95 million workers and created about 135,000 net jobs in the past fiscal year. An American client can continue to buy software development, consulting, maintenance and other tech services from an Indian team without requiring those professionals to be based inside America.  

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A restriction on permanent residency might well impose genuine costs on workers while having limited impact on the revenue-generating capabilities of their employers. The differential impact will vary from company to company, project to project, and staffing model to staffing model, but the nuance explains how the market’s response to the policy change need not reflect the impact on individual workers’ circumstances. 

For Indian IT companies, the PERM freeze may prove a small financial blow rather than a major threat to their business model. Most of their American revenue streams do not rely on having every employee on their payroll based in the US, and the fall in on-site earnings suggests an industry growing more capable of providing services beyond borders. 

For Indian professionals, the implications are more personal. A green-card process that already takes years to complete has just become even more unpredictable for those considering applying, and for whose employers are affected. Even if their American jobs are unaffected, their plans for permanent residency may be set back. 

And for India, the long-term impact is harder to assess. Restrictions on immigration may motivate multinational companies to invest more in local infrastructure, creating jobs and cementing India’s role as a centre for tech production. But it would also shift work away from Indian outsourcing firms and towards the captive centres of their American clients. 

The short-term financial pain may be minimal.  

The anxiety for those affected is however far greater. And the longer-term challenge will be whether the US can prevent a rush to move work to where it will have value, by closing access to where it currently does.  

This moment also marks a troubling low-threshold point in US-India relations almost causing an irreparable harm to the long decadal diplomatic relationship between the two countries. 

First, tariffs on Indian imports, and now restrictions on skilled human capital mobility from India to American companies could erode and dismantle core areas of economic integration between the two countries which was cementing a strong political bond as well. Where this leaves India and its economic integration strategy viz-a-viz the US (amidst a more conflicting relationship with China) should trouble policymakers than it seems to do in the current scenario. 

[Wc/VP]

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