New Delhi [India], October 12 (ANI): The US suspension of labour certification applications for eight major technology companies could increase operating costs and affect investor sentiment towards Indian IT firms, although greater local hiring and offshoring may help limit the impact, according to a report by JM Financial.

On October 8, 2026, the US administration announced the suspension of eight major technology companies-Microsoft, Adobe, Cognizant, Infosys, TCS, Wipro, HCL Technologies and Capgemini-from the Permanent Labor Certification (PERM) programme.

The US Department of Labor said it would neither accept new applications nor process pending ones involving these companies, without specifying when the suspension would end.

Also, the move primarily affects employees with pending PERM applications or those whose employers have yet to file them, rather than the entire H-1B workforce. 

"Employees approaching the usual six-year H-1B limit without qualifying green card filings could face greater uncertainty around their ability to extend their stay," JM Financial noted. 

For Indian IT firms, prolonged immigration restrictions could increase hiring, employee retention, subcontracting and transition costs, prompting companies to rely more on local hiring and offshoring.

"We expect the announcement to weigh on near-term sentiment towards the impacted companies, with financial implications becoming clearer as the duration and implementation of the suspension play out," it further added. 

According to JM Financial, "companies' sustained efforts to expand local hiring and diversify delivery locations should provide some cushion." 

Apart from this, the report noted greater localisation could reduce visa dependence and ensure uninterrupted service delivery, it may also raise onsite staffing costs. At the same time, "higher offshoring and selective client cost-sharing should provide partial offsets," it said. 

However, overall delivery costs may still rise despite these measures, posing potential risks to the earnings per share (EPS) of affected companies.

"Net-net, we see a risk of higher delivery costs despite these mitigation strategies. We would, therefore, monitor EPS for the companies impacted," JM Financial said in the report. (ANI)