H-1B Visa Impact: Rs 33,000 crore market cap wiped out

The shares of IT companies started falling at the start of new era of Trumponomics. Indian IT stocks crashed on Tuesday after a bill was introduced in the US House of Representatives calling for more than doubling the minimum salary of H-1B visa holders to USD 1,30,000, from the current USD 60000.

A sharp rise in minimum salary will make it difficult for Indian IT companies to hire employees on H-1B visas to work on projects in the US. Currently, IT sector’s 60 per cent of the revenues come from the US.

The BSE IT index fell over 4 per cent. The share price of TCS dropped 5.6 per cent, Tech Mahindra 9.7 per cent, HCL Technology 6.3 per cent, Infosys 4.6 per cent and Wipro 4.23 per cent. A total of Rs 33,058 crore market cap has been wiped out on a single day. IT major TCS's market cap worth Rs 20,000 crore vanished into thin air. Infosys and HCL Technologies have lost market caps to the tune of Rs 4,375 crore and Rs 4,353 crore, respectively.

Going forward, Indian IT companies may have to employ more US citizens, which will significantly raise the employee cost, thus impacting their margins and overall profit. Meanwhile, the Indian IT industry is already battling decelerating growth rate amid big changes in the technological landscape (like automation and artificial intelligence) and global headwinds such as Brexit.