Official White House photo by Shealah Craighead
TCS and Infosys Well-Positioned Amid US Tariff Challenges
Indian IT giants TCS and Infosys are expected to withstand potential cost increases from US tariff policies and stricter immigration rules, according to industry assessments. While the business services sector is not directly impacted by tariffs, evolving US trade and immigration policies could affect companies relying on foreign labor.
Impact of US Trade Policies on IT and Business Services
The business services sector, including major IT firms, is indirectly affected by US immigration rules rather than direct tariffs. Changes in H1B visa policies and restrictions on foreign labor could limit the availability of skilled IT professionals in the US, impacting Indian companies operating in the region.
To mitigate risks, companies like TCS and Infosys have been actively expanding their onshore hiring in the US, reducing dependence on foreign work visas. India continues to dominate H1B visa approvals, with nearly 75% of all such visas in 2023 issued to Indian nationals. However, any tightening of US immigration policies could lead to higher labor costs and a shift in hiring strategies for Indian IT firms.
TCS and Infosys: Strong Financial Standing
Despite these potential cost pressures, TCS and Infosys remain well-positioned due to their high profitability and financial resilience. Their strong operating margins and global diversification enable them to absorb rising costs more efficiently than smaller competitors.
Minimal Impact on Steel and Chemicals Sectors
For the steel and chemicals sectors, the US tariffs are expected to have limited direct impact. Indian steelmakers, including major producers with global operations, derive most of their earnings from Asian markets, with minimal exports to the US. However, the diversion of low-cost exports from other markets to India could lead to increased supply pressures, potentially affecting pricing and profit margins.
Strategic Adaptations for Future Growth
Given these evolving trade policies, Indian IT leaders are focusing on scaling their global presence, strengthening financial buffers, and adjusting hiring practices to minimize risks. The ability to adapt to changing economic and regulatory landscapes will be crucial in maintaining competitive advantage and ensuring long-term growth in the face of global trade shifts.
While US trade policies pose challenges, companies like TCS and Infosys are leveraging their strong financial performance and proactive hiring strategies to navigate potential disruptions and sustain business growth.
