Although President Donald Trump's return to the White House has sparked questions about whether the US's immigration laws are ready for a change, India's IT sector is hopeful about a boost to the services sector.

"The Republican regime's previous anti-immigration initiatives, like enacting laws that raised prevailing wages for H1B workers, were reversed due to legal opposition," stated Poorvi Chothani, founder and managing partner of LawQuest, a Florida-based immigration law company. "Since the Republicans now essentially control Congress, we should not just prepare for more of this but also for amendments to the Immigration and Nationality Act. In the meanwhile, hiring foreign workers—whether through the H-1B program or not—is probably going to get more costly and challenging".

The present quota of 85,000 H1B work visas may be reevaluated by the Trump 2.0 administration. Since the refusal rates for H1B under the Trump 1.0 administration reached an all-time high of 24%, H1B petitions would be subject to more stringent scrutiny. There may also be new examination of the eligibility and duration of Optional Practical Training (OPT) for international students.

As they aim to increase their onshore workforce, India's IT companies have gradually decreased their reliance on H1B clearances, despite harsher anti-immigration sentiment that may be cause for concern.

According to Shaji Nair, research analyst at Sharekhan by BNP Paribas, "there have been concerns regarding Trump's re-election with regard to tougher H1B visas, but its effect on Indian IT service companies may not be as significant as perceived".

Over the past eight years, the top seven IT services businesses in India—including TCS, Wipro, Infosys, and HCL—have used the H-1B, the top US work visa program, 56% less frequently.These seven organizations filed 6,732 H-1B visa petitions for first employment in the United States in 2023, down from 15,166 in fiscal 2015.

According to Yugal Joshi, a partner at the research and consultancy firm Everest Group, India-based global competence centers, or GCCs, have also become as crucial to the success of US giants. He stated that "all of these factors may negate the negativity".

Additionally, the Trump 2.0 government might adopt a more lenient approach to high-skilled immigration with tech tycoon Elon Musk at his side, according to Pareekh Jain, founder and CEO of IT consulting firm EIIRTrend. "The Indian IT industry will benefit overall from Trump's victory," Jain stated.

The tech industry is the main pillar of the bilateral relationship between the US and India, according to Nasscom, the country's top technology organization.

The US is the biggest market for India's $254 billion technology sector, which contributes $80 billion to the US economy overall. With a positive outlook on the next administration, it stated, "On the other hand, India is a top destination for American businesses, with over 1,000 US companies driving innovation and leveraging India's digital infrastructure to create competitive solutions".

The IT Rally

As tech companies drove Wednesday's gain on India's leading stock indices, IT majors celebrated the Republican victory. Infosys experienced a 3.59 percent gain, followed by Tata Consultancy Services at 3.55% and HCL Technologies at 3.57%.

A stronger dollar will help India's IT outsourcing sector's bottom line, while Trump's plan to lower the corporation tax rate from 21% to 15% is expected to reduce budgetary strains and increase US companies' discretionary tech investment, according to experts.

"Trump's plan to lower the corporate tax rate from 21% to 15% is expected to relieve financial strain on US corporations and organizations, which is good news for Indian IT service providers whose revenue growth rates have fallen over previous few quarters, as a result of their clients' limitation on discretionary spending", Nair of ShareKhan stated. "In general, we believe that Trump's re-election will benefit Indian IT services firms".

US firms' IT budgets may be loosened as a result of the lighter financial policies that IT companies foresee regarding interest rates, inflation, etc. Since the US is a major commercial market for the majority of IT services companies, a stronger dollar helps the Indian outsourcing sector. As a result, although though the industry's operating expenses are in Indian rupees, a significant portion of its revenue is generated in US dollars.