On October 8, 2026, the U.S. Department of Labor decided to stop processing PERM labor-certification requests from eight technology firms, including Microsoft, Adobe, Cognizant, Infosys, Tata Consultancy Services, Wipro, HCL Technologies, and Capgemini. The Department of Labor said it would neither accept new applications nor process pending applications involving the named companies.
PERM, or Program Electronic Review Management, is the initial step in the employment-based green card process for most immigrants applying under the EB-2 and EB-3 categories. In order to proceed to the next stage, employers are required to prove that they have tried to hire Americans for the jobs in question.
The processing of the applications has been suspended in accordance with 20 CFR § 656.31(b), which allows for the temporary interruption of services if there are grounds to believe that fraud or willful misrepresentation is involved.
Vice President J.D. Vance accused companies that employ people on H-1B visas of creating a caste of foreign indentured servants. Notwithstanding the administration’s justification, allegations must not be confused with provided proof of fraudulent activity.
On the heels of the H-1B controversy came reports of investigations into the J-1 visa program, involving dozens of American universities. In the context of Vance’s comments on H-1B visas and intensified scrutiny of J-1, the latest development suggest that the debate over the United States’ immigration policy and the prospects of its labor market will continue to gain momentum. This would, in the meantime, systematically erode India’s IT service sector’s integrative loop with American companies and vice versa.
The H-1B-to-green-card process has three basic stages: entering the United States, living there as a worker, and eventually receiving permanent residency. Each of these possesses its own restrictions.
Indian nationals comprise a significant part of successful H-1B applicants. A U.S. Citizenship and Immigration Services’ FY2024 H-1B characteristics report said that Indians comprised 71 percent of successful applicants in 2024.
The H-1B has become an IT program. Infotech workers made up 32 percent of H-1B holders in fiscal year 2003 and averaged over 65 percent across the last five fiscal years. H-1B status permits temporary employment, subject to immigration rules and the conditions of the petition. Workers may continue working lawfully while their green card applications are delayed, provided their existing authorization remains valid.
PERM falls under the third step, which concerns the transition from being a temporary resident to receiving permanent residency. The suspension interrupts a stage of the process for affected applications, potentially delaying workers’ transition to permanent residency. Its consequences depend on the status of each application.
Given a massive backlog, the PERM suspension impacts individual workers. But its immediate relevance for corporate profits is limited.
The Cato Institute estimated the U.S. employment-based waiting list to contain approximately 1.8 million people in 2023, around 1.1 million of whom are Indians. This puts the portion of Indians in the queue at around 68 percent. The report estimated the time necessary to clear the backlog for Indian applicants to be up to 134 years, with approximately 424,000 Indians expected to die before obtaining a visa.
This might have more of an impact than it seems. Permanent residency is a significant factor in the worker’s life, affecting their decision-making and planning. Another obstacle in their employment-based residency application might disrupt their lives severely.
Even before the PERM suspension, the U.S. immigration system was becoming more expensive and unpredictable. The Trump administration announced a $100,000 H-1B fine announced in September 2025. That was later clarified by USCIS to be applicable only to petitions made after September 21, 2025, as a one-time payment rather than an annual renewal.
Employers are adjusting their strategies accordingly. An RBI survey tracked an erosion in on-site revenues, from $19 billion to $18.4 billion. These are wages paid to staff members who work at client facilities overseas. The reduction implies that the traditional approach of sending numerous Indian professionals to work overseas is being de-emphasized relative to other approaches to technology services delivery.
Nasscom data revealed that Indian IT revenue totaled $315 billion in FY2025-26, up 6.1 percent, with exports of $246 billion, up 5.6 percent. The industry employed some 5.95 million workers and created about 135,000 net jobs in the past fiscal year. An American client can continue to buy software development, consulting, maintenance, and other tech services from an Indian team without requiring those professionals to be based inside the United States.
A restriction on permanent residency might well impose genuine costs on workers while having limited impact on the revenue-generating capabilities of their employers. The impact will vary from company to company, project to project, and staffing model to staffing model, but the market’s response to the policy change need not reflect the impact on individual workers’ circumstances.
For Indian IT companies, the PERM freeze may prove a small financial blow rather than a major threat to their business model. Most of their American revenue streams do not rely on having every employee on their payroll based in the U.S., and the fall in on-site earnings suggests an industry growing more capable of providing services beyond borders.
For Indian professionals, the implications are more personal. A green card process that already takes years to complete has just become even more unpredictable for those considering applying, and for whose employers are affected. Even if their American jobs are unaffected, their plans for permanent residency may be set back.
For India, the long-term impact is harder to assess. Restrictions on immigration may motivate multinational companies to invest more in local infrastructure, creating jobs and cementing India’s role as a center for tech production. But it would also shift work away from Indian outsourcing firms and toward the captive centers of their American clients.
The short-term financial pain may be minimal. The anxiety for those affected, however, is far greater. And the longer-term challenge will be whether the U.S. can prevent a rush to move work to where it will have value, by closing access to where it currently does.
This moment also marks a troubling low-threshold point in India-U.S. relations, almost causing an irreparable harm to the long diplomatic relationship between the two countries. First, tariffs on Indian imports, and now restrictions on skilled human capital mobility from India to U.S. companies could erode and dismantle core areas of economic integration between the two countries, which were cementing a strong political bond as well.
Where this leaves India and its economic integration strategy viz-a-viz the U.S. (amidst a more conflicted relationship with China) should trouble policymakers more than it seems to do in the current scenario.
Originally published under Creative Commons by 360info™.
