TCS, Infosys, HCLTech, and Wipro jumped 1.72%, 1.6%, 0.84%, and 0.1%, respectively, on Tuesday. On the other hand, Tech Mahindra’s shares fell 0.57%. The Sensex rallied 2.54%.
The country’s $283 billion IT sector is expected to be the biggest indirect beneficiary of the US’s rollback of its 25% reciprocal tariffs on New Delhi, as the move could lead to less scrutiny of visa applications, according to experts.
“Our non-consensus upgrade of IT to overweight at the start of the year also remains intact. IT has the largest exposure to the US, and while the deal primarily covers manufactured goods, our outlook was that improved US-India relations—even if short-lived—would reduce scrutiny on IT services and lower the risk of further punitive actions (such as additional taxes),” wrote Bernstein analysts Venugopal Garre and Nikhil Arela in a 3 February note.
A second brokerage expects better results for the IT services sector, including back-end tech centres of large companies.
“With US economic growth expected to stay robust for a major part of CY26E, combined direct and indirect gains can be more than expected, leading to positive spillovers on India’s key export players’ earnings for FY27. Key to watch will be how the services exports to the US evolve as Global Capability Centres evolve as the execution model amid rising visa scrutiny,” said Elara Capital analysts Garima Kapoor, Subhankar Sanyal, and Shweta Roy, in a 3 February note.
India and the US have finalized a bilateral trade agreement, as announced on social media by Trump and confirmed by Modi late on Monday night. The deal will bring tariffs on Indian goods exports down to 18% from the existing 50%, which included a reciprocal 25% levy. In return, India has committed to cutting tariffs on US goods to near zero and to eliminating non-tariff barriers across sectors such as energy, technology, and agriculture.
Expected reprieve
For now, IT outsourcing firms are expected to face less scrutiny from US lawmakers over their hiring of H-1B visa holders.
On 19 September 2025, Trump issued a proclamation, Restriction on Entry of Certain Nonimmigrant Workers, imposing a $100,000 fee—up tenfold—on new H-1B applications.
Trump’s decision became a key talking point in IT companies’ boardrooms and among industry experts, as firms such as TCS, Cognizant, and Infosys rank among the 15 largest users of the non-immigrant visas. Any increase in the costs of sending IT professionals to client locations across the US hurts their profitability.
Five days later, Republican senator Charles E. Grassley of Iowa and Democratic senator Richard J. Durbin of Illinois targeted several companies, including TCS and Cognizant, over their hiring practices. Both lawmakers wrote joint letters to K. Krithivasan and S. Ravi Kumar, the chief executives of TCS and Cognizant, respectively, seeking responses to claims of race-based discrimination and the substitution of American workers with low-cost H-1B employees.
In the same month, Republican senator Bernie Moreno of Ohio proposed the Halting International Relocation of Employees (HIRE) Act to increase taxes on companies that hire offshore employees from their IT vendors.
IT services firms, in return, have stepped up lobbying efforts on issues including H-1B visas, with TCS, Cognizant, and Infosys collectively spending at least $2.7 million in 2025.
For now, each of them has increased local hiring and is shifting employees to near-shore locations to defend their profitability. Higher offshoring or nearshoring helps boost margins by lowering employee costs, particularly salaries.
“So, our approach is very clear. We have, as we have shared in the past, the majority of our employees in the US who do not require a visa. We are continuing with our deployments and our delivery using a mix of what we have —work in the US and work in India. So, no changes to that approach. At this stage, we are continuing with our process because there is an existing set. We will examine it as it comes up in the future,” said Salil Parekh, CEO of Infosys, during the company’s post-earnings press conference on 14 January.
Fresh optimism
This wave of optimism comes even as the country’s largest IT services companies face tax-related uncertainties in their biggest markets. When countries impose taxes, large companies hold back on tech spending and focus on essential spending needed to run their core businesses.
Still, a third brokerage expects more IT-related deals from the US.
“Sentiment revival that had seen setbacks due to visa issues and negative press around outsourcing. Deal momentum from the US clients to improve,” said Motilal Oswal Financial Services analysts Abhishek Saraf, Gautam Duggad, Deven Mistry, and Aanshul Agarawal, in a 3 February note.
TCS, Infosys, HCLTech, and Wipro ended 2024-25 with revenues of $30.18 billion, $19.28 billion, $13.84 billion, and $10.51 billion, respectively. More than half of this revenue comes from the US. Indian IT services companies follow an April-March financial calendar. Cognizant, which follows a January-December financial calendar, ended 2024 with $19.74 billion in revenue.
While the mood within Indian IT is slightly better, caution remains.
“In Q2 (July-September 2025), we had called out that the overall demand environment is improving compared to Q1, so in Q3, that trend continues,” said Krithivasan during the company’s post-earnings conference call with analysts on 12 January.
TCS, which gets over 94% of its revenue from overseas markets, had said it was “confident” that international business would grow faster in the current fiscal year than in 2024-25, but in the 12 January analyst call, the CEO said this now remains an “aspiration”.
