Why Is America Targeting Indian IT Companies?

The latest controversy began after the U.S. administration suspended the processing of PERM applications involving several major technology companies. The companies affected include Tata Consultancy Services (TCS), Infosys, Wipro, HCLTech, Cognizant and Capgemini, along with American technology companies such as Microsoft and Adobe.

PERM, or Permanent Labor Certification, is an important step that employers generally use when sponsoring certain foreign employees for employment-based permanent residency, commonly known as a Green Card. The U.S. government's argument is that the system should protect opportunities for American workers and prevent companies from using foreign-worker programmes improperly.

This is why Indian IT companies have come under particular attention. TCS, Infosys, Wipro and other Indian technology-services companies have historically been significant participants in the U.S. technology and consulting market.

Why Does America Want Companies to Hire Americans?

The central argument from the U.S. government is simple: American companies operating in America should create substantial employment opportunities for Americans.

U.S. officials have accused some companies of using foreign-worker programmes in ways that could disadvantage American employees. Vice President JD Vance has argued that companies should not lay off American workers while simultaneously relying on foreign workers through immigration programmes.

This argument is politically powerful because employment is a domestic issue. If an American worker believes that a company replaced an American employee with a foreign worker, the government faces pressure to intervene.

But there is another side to the debate.

Why Do TCS and Infosys Hire Indians in the First Place?

The reason is not necessarily that Indian workers are being hired simply because they are Indian.

Large IT-services companies operate internationally and need people with particular technical skills, experience, project knowledge and domain expertise. A company such as TCS or Infosys may have a worker in India who has already spent years working on a specific banking, cloud, cybersecurity, artificial-intelligence or software project.

If that employee needs to work directly with a U.S. client, transferring that person temporarily to the United States can be commercially useful.

The same principle exists across the global economy. Companies do not normally select employees only according to nationality. They consider skills, experience, cost, availability, project requirements and the ability to deliver results.

Therefore, the argument that “Indian companies hire Indians because they do not want Americans” is too simplistic.

Are Indian Workers More Capable Than American Workers?

This is where the debate becomes sensitive.

It would be incorrect to claim that Indians are automatically more capable than Americans. The opposite claim would also be incorrect.

The U.S. has some of the world's strongest universities, technology companies, researchers, engineers and entrepreneurs. India also produces a huge pool of engineers, software professionals and technology specialists.

The real issue is specific talent for a specific job.

Suppose a company needs an engineer who has already worked for five years on a particular banking software platform. If its Indian employee has exactly that experience while the available local candidates do not, the company may prefer the experienced employee.

From the company's perspective, the nationality of the employee should not be the deciding factor. Capability, experience and business requirements should matter.

However, the U.S. government is essentially arguing that companies must also demonstrate that foreign-worker programmes are not being used to avoid hiring qualified American workers.

Is America Really Against Indian Companies?

Not exactly.

This distinction is extremely important.

The latest restrictions do not target only Indian companies. Microsoft and Adobe, two major American technology companies, have also been affected by the PERM suspension. That indicates that the broader policy is about foreign-worker and employment-based immigration programmes rather than simply being an anti-India policy.

At the same time, Indian professionals are disproportionately important in the U.S. skilled-worker system. Indians have historically represented a very large share of H-1B beneficiaries, meaning changes to immigration rules can have an especially large effect on Indian technology professionals.

So while the policy is not officially “against Indians,” Indians can feel a disproportionate impact because of their large presence in the technology and H-1B ecosystem.

The Bigger Problem: H-1B Versus American Hiring

Another important distinction is between the H-1B programme and PERM.

An H-1B visa allows eligible skilled foreign workers to work temporarily in the United States. PERM, on the other hand, is generally connected with an employer's process of sponsoring an employee for permanent residency.

These are not the same programme.

The current PERM suspension therefore does not mean that every Indian employee working in America has suddenly lost their job or visa. The immediate impact is more concentrated on employees and companies involved in the permanent-residency process.

Indian IT Companies Are Already Changing Their Strategy

Interestingly, Indian IT companies have already been reducing their dependence on sending employees from India to the U.S. through traditional visa routes.

Indian technology companies have increasingly focused on hiring workers locally in America while continuing to deliver other work from India. TCS, for example, has said it plans to hire 15,000 additional employees in the United States over the next five years.

The economics are also changing. Higher visa costs and tighter immigration rules are making it less attractive for companies to depend heavily on new H-1B workers.

Recent reporting indicates that fresh H-1B registrations from major Indian IT companies have fallen sharply, demonstrating how companies are adapting to the new environment.

What Does This Mean for Indian Employees?

For Indian professionals already working in America, the biggest concern may not necessarily be an immediate job loss.

The bigger issue can be long-term immigration planning.

An employee who entered the United States through an H-1B visa may eventually want permanent residency. If the employer's PERM process is suspended, that pathway can become slower or more uncertain.

This is particularly important for Indian professionals because employment-based Green Card backlogs for Indian nationals have historically been substantial.

However, the latest data also suggests that the direct business impact on major Indian IT companies could be limited in the short term. Reuters reported that Indian IT firms have significantly reduced their reliance on the PERM route, with the companies accounting for less than 2% of PERM applications in the relevant period.

Why This Debate Will Continue

The disagreement ultimately comes down to two competing ideas.

The first is the American government's argument: companies operating in the United States should give American workers a fair opportunity and should not misuse immigration programmes to obtain cheaper labour.

The second is the industry's argument: businesses should be allowed to recruit the best person for a particular job, regardless of nationality, especially when specialised skills are scarce.

Both arguments contain legitimate concerns.

If a company genuinely cannot find a qualified American candidate for a specialised position, restricting access to global talent could make American businesses less competitive. But if a company deliberately uses immigration programmes to avoid hiring equally qualified American workers, stronger enforcement can be justified.

That is why the TCS, Infosys and broader Indian IT controversy should not simply be described as “America versus India.” It is better understood as a growing battle over who gets access to American jobs, how skilled immigration should work, and how companies should balance global talent with domestic employment.

The direction of U.S. policy is increasingly clear: American operations are likely to rely more heavily on local hiring, while Indian IT companies will continue expanding their U.S.-based workforce and reducing their dependence on visa-driven staffing models.

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