US green card curbs, AI disruption: Why Indian IT giants must rethink their business model

The Donald Trump administration’s decision to cut out Indian IT companies from green card processing is an assault on their business model. The U.S. decree has thrown up an important question about whether Indian giants are capable of reworking their business strategies to deal with the new situation.

This is a relevant question because Washington has poured cold water on the aspirations of thousands of Indians with plans to build a career in the U.S. The move has blocked the pathway for obtaining green card for thousands of Indians who have already applied for it, and many more who were hoping to acquire it.

Washington has suspended major technology companies, including Infosys, TCS, Wipro, HCLTech, Cognizant, Capgemini, Microsoft and Adobe, from the permanent labour certification (PERM) programme, which is an important step in the employer-sponsored green card process. These eight companies happen to be major employers for Indian talent.

Indians seeking H1B visa, the first step in the work visa chain, also face some amount of uncertainty. The three-year H1B visa is usually granted twice after which the employees apply for green card. With the green card pathway almost blocked, it is difficult for aspirants to plan for a long career in the U.S.

The new development needs to be seen in the wider context of game-changing developments since the advent of AI or artificial intelligence in the past 2-3 years. Indian IT giants have been slow in both AI adoption and innovation. They have struck to the old strategy of providing support and maintenance services to client companies using U.S.-made software and AI models.

New opportunity

This may be an opportunity for Indian giants to turn a challenge into an opportunity by revamping their business model with a sharp focus on innovation and product development. Barring the U.S. and China, most other countries have fallen behind in AI adoption and advancement. There is a lot of market including Europe, Japan, the Middle East and Canada that can be explored if Indian firms use the vast reservoir of engineering talent to emerge as contenders of AI power.

But initial reaction emerging from IT companies and NASSCOM, the IT industry association do not reveal any plan to rework their strategies. NASSCOM chairperson Srikanth Velamakanni, indicated there may be an increasing in outsourcing with Indian companies doing most of the contracted jobs in India instead of sending staff to the U.S.

“When labour is not able to move to where the work is, the work will move to where the labour is,” Velamakanni said in an interview. IT industry experts say that 70% of the tasks are presently done in India and the rest conducted in the U.S. This ratio might change to 85-90% in India.

Estimates suggest that a million Indians, including dependents, are waiting for employment-based green cards, most of them in the EB-2 and EB-3 categories, according to Sukanya Raman, country head for India at immigration-focused law firm Davies & Associates. “These are people who have spent years on temporary status and followed every rule, and now their green card process is on hold because of a dispute they have no part in,” she added.

According to experts, IT employers are likely to apply a three-pronged strategy. They may hire more US citizens and permanent residents, expand offshore and nearshore delivery capabilities, and become more selective about international employees. They may also explore other immigration options like O-1A visas for individuals with extraordinary ability and EB-1A or EB-2 NIW green card categories for employees who independently qualify.

Government’s expectations

In some sense, major Indian companies act as middlemen implementing US models like ChatGPT and Claude in the IT systems of client companies. Bulk of the tasks performed by them is clerical covering areas like call centres, ticketing, IT support, maintenance and software testing. The big companies do little by way of original work like designing and innovation though start-ups are doing well in these areas.

Union Commerce Minister Piyush Goyal have been repeatedly exhorting Indian companies to invest in large language models (LLMs) and agentic models since the ‘DeepSeek moment’ in January 2025 when a Chinese AI company stunned the world by launching a LLM that was built at extremely low cost but proved to be as efficient as major U.S. models. But this did not fire Indian CEOs into action. It takes industry leaders capable of taking their eyes away from the stock market ticker for a few moments to invest in innovation.

“Major Indian IT companies do not possess the DNA for innovation and risk taking. They do little to nurture talent,” Alok Mani Tripathi, CEO of RPATech, a Delhi based RPATech, a AI Automation consulting and services company.

AI is already replacing a section of jobs in IT industry as it is doing in other sectors. Routine and entry-level activities basic coding/boilerplate, L1 testing/QA, simple data processing, and some support functions are seeing the clearest displacement or compression. Productivity gains from tools such as coding assistants and internal AI platforms is prompting companies to layoff a section of their employees.

With Indian companies lagging behind in AI innovation, they would be less capable in absorbing IT engineers in large numbers in the coming months and years. The outflow to the U.S. will also slow down while some U.S. based engineer may return after completing two terms of H1B visa. The result would be severe employment market pressure as engineering universities will continue to churn out new sets of freshly minted engineers.

The government needs to do more than merely persuade companies to innovate because the stakes are very high. Low AI development would impact technology up-gradation in the broad economy and equipment used by the military. The government also needs to direct IT companies to contribute in developing an AI ecosystem, acting tough if necessary.