‘Suspension Of PERM May Not Immediately Affect Indian IT Companies’

‘…but could demotivate employees seeking US permanent residency.’

IMAGE: The Statue of Liberty in New York harbour. Photograph: Brendan McDermid/Reuters

I am hereby suspending from the Permanent Labor Certification Program some of the largest IT outsourcing firms in the world — Cognizant, Infosys, Tata, Wipro, HCL, and Capgemini.

This was the bombshell statement from US Secretary of Labor Keith Sonderling on the 8th of October 2026.

The Permanent Labour Certification Programme or PERM (Program Electronic Review Management) is the mandatory first step used by American employers to sponsor foreign workers for permanent residency in the country. It is overseen by the US department of Labour.

All Indian IT companies use this program to bring in employees from India.

How will the US government decision affect India’s IT majors?

“Many people join the IT sector because they want to maybe get their H-1B or L-1 from the company and go to the US. A large number of them apply for Green cards, which is the PERM programme, and even become US citizens. If you look at my own family, two brothers-in-law and one sister-in-law, all of them went through the same route. That route looks blocked now,” Dr Ganesh Natarajanformer chairman of NASSCOM and the NASSCOM Foundation, tells Rediff‘s Shobha Warrier in the first of a two-part interview.

In what way will the suspension of Permanent Labour Certification Programme affect Indian IT companies? Is it going to affect the companies more or the employees?

That’s a good point you’re raising.

There is no effect on the companies in the short term because H-1B visas have not been curtailed or the cost increased again. There was nothing on H-1B visas in this particular announcement.

But the person who will be demotivated is the employee.

Many people join the IT sector because they want to maybe get their H-1B or L-1 from the company and go to the US.

A large number of them apply for Green cards, which is the PERM programme, and even become US citizens.

If you look at my own family, two brothers-in-law and one sister-in-law, all of them went through the same route.

That route looks blocked now. Hereafter, if you’re working for a large company like TCS or Infosys or Accenture, even if you go on an H-1B, you have to come back because you can’t get the Green card.

So, that’s the demotivation for employees.

When there is demotivation in employees, there will be some medium-term impact on the companies.

But short term, there is no real impact on Indian IT companies.

Kindly note the image has been posted only for representational purposes. Photograph: Kind courtesy TCS

Is it only for cost effectiveness that Indian IT companies employ Indian professionals in the US?

Not really. There is a lot of IT talent in India, thanks to the universities, thanks to various institutions that came up over the 1990s.

There is a huge pool of talent in this country, which is very technology orientated.

The same thing is now happening in artificial intelligence also.

Because of availability, access to talent is very good in India.

Indian companies do try to acquire local (US) talent also. But sometimes it’s not so easy to get them.

Say, if you’re looking for somebody with 15 years’ experience, it’s easier sometimes to get them in India than in the US.

The pronouncement by Vice President J D Vance is, ‘look, American talent is great, and you should recruit them’.

I agree with him that good American talent is great. But the abundance of talent in India is not equal to what is available in America.

Generally, what is the balance between local American workers and Indian professionals in Indian IT companies based in the US?

It depends on the company. It also depends on the nature of work.

If you look at only onsite work or people working onsite, the balance would be around 70-30; 70% from India, and 30% local.

If you look at the offshore outsourcing industry, where 90% of the work or 80% of the work is done offshore, it happens entirely in India by Indians.

In the case of offshore work, it is possible that almost 85% of the work of a project is being performed by India originating resources.

Is it because talent is available in India, and the quality of the talent also is good that 85% of the work is done offshore?

That is primarily the case for onsite work. But 70%-80% of the work is done offshore.

That is because offshore resources are of high quality and also cheaper. The cost of an Indian programmer in India is probably one fourth the cost of an Indian programmer or an American programmer in the US.

Which is why the offshore industry was created, to do the work at the same quality, but do it offshore.

That’s why we have so many clients.

But one perception is that, if this kind of restrictions continue, then more and more American work may flow to India, and not so much recruitment in the US.

Recruitment may be less in the US, but there will be more offshore work, and more global competency centres (GCC).

This trend may get accelerated. But that is something we will have to wait and see.

Kindly note the image has been posted only for representational purposes.Photograph: Kind courtesy 112 Uttar Pradesh/Pexel.com

These are actually highly skilled professionals. Vance described them as indentured foreign servants. Is it not a derogatory term?

We cannot comment on the language used by the country, because after all, it is their country, and their immigration policy.

I agree there are a few small companies which might be trying to send people at low salaries.

But by and large, if you look at the large and medium IT companies which have global listings on the stock exchanges, they are very professional companies.

They would not take any shortcuts.

I think what he said is a bit of an exaggeration.

Having said that, America is the biggest customer for Indian IT.

So, we have to be very conscious of not only the realities, but also perceptions.

IMAGE: Dr Ganesh Natarajan

What J D Vance said was, they are bringing in people who shouldn’t be in America to begin with….

That is obviously not true.

Because the client would not take them if they did not add value.

I agree that, given the first opportunity, if there is a local person available, either an American or maybe an Asian who has been born and raised in the US, then we should consider them first.

If that’s not possible, getting competent people from anywhere in the world, including India, could be the second priority.

That is true for American clients. That is true for American companies like Accenture or Microsoft. It should also be true for Indian companies.

Feature Presentation: Aslam Hunani/Rediff