Fears of U.S. visa overhaul push Indian IT stocks lower

SAN FRANCISCO (Reuters) - Shares of Indian technology companies deepened losses on Wednesday as investors worried U.S. President Donald Trump and legislators would impose tougher rules on skilled-worker visas that those firms rely on.

An employee walks past a signage board in the Infosys campus at the Electronics City IT district in Bengaluru, India, February 28, 2012. REUTERS/Vivek Prakash/File Photo

U.S. shares of Infosys INFY.NSINFY.N fell 1.5 percent, bringing their loss to 4 percent since the introduction of legislation in Congress last week aimed at tightening requirements for H-1B work visas.

Indian IT companies serving U.S. corporations are among the largest sponsors for H-1B visas, using them to employ programmers and other technology workers.

“Should the new political regime cap visa access we would expect margins to compress in the IT services sector,” Susquehanna analyst James Friedman warned in a note to clients on Wednesday.

U.S. shares of Wipro Ltd WIPR.NS, another major Indian IT service firm, lost 1.7 percent and are down 6 percent in the past week.

Arguing that they face a shortage of skilled U.S. workers, technology companies including Microsoft MSFT.O and Apple AAPL.O say they need more H-1B visas, while critics say the program is used as a source of low-cost labor.

A bill introduced on Jan. 24 by Congresswoman Zoe Lofgren, a Democrat from California, would double the minimum salary required for holders of H-1B visas to $130,000, which is more than many currently make.

White House Press Secretary Sean Spicer told reporters on Monday that Trump was looking at potential new rules for H-1B visas as part of a larger immigration effort. His proposed Attorney General, Senator Jeff Sessions, is a long-time critic of the H-1B program.

An increase in the minimum salary paid to H-1B visa holders could hurt the earnings of Indian IT companies by as much as 22 percent, Deutsche Bank said in a report on Tuesday.

In 2015, Tata Consultancy Services TCS.NS secured 8,333 H-1B visas, more than any other company, according to government data compiled by the Institute of Electrical and Electronics Engineers.

Tata’s stock dropped 2.78 percent on the Indian stock market on Wednesday and is down 8 percent so far this week.

Reporting by Noel Randewich; Editing by Chris Reese