Shares of major Indian IT companies plunged more than 5% in intra-day trading after Congresswoman Zoe Lofgren from California introduced a new H1B legislation which would require H1B visa holders to have annual salaries of greater than $100,000. These companies depend heavily on H1B visas to staff their IT consultants at US client locations and execute their lucrative IT projects. In fact, these companies are among the largest beneficiaries of H1B visas- you can see how many visas they receive in our previous chart here.
But just how dependent are the top Indian IT firms upon US-based companies? Turns out, a lot. TCS derives over 60% of its revenue from North America. In FY 2016, the company earned $16.5 Billion. HCL Technologies too earns almost 60% of its revenues in North America, Infosys earns 57%, while Wipro earns just over half there. While these companies are gearing up to make an appeal to the US government, Infosys Chairman Emeritus Narayana Murthy has urged them to reduce their dependency on US visas and innovate. Indian companies have adapted to the turbulent Indian regulatory environment in the past so investors should expect them to adapt to these new developments as well. IT has emerged as a strategic function for companies and the opportunity to innovate, serve customers, and earn a handsome profit in the process should persist for a long time to come.