TCS to Report Q2 as US H-1B Fee Hikes Hit IT Sector
- TCS reports amid AI layoffs and H-1B visa fee hike.
- Slow client spending and higher visa costs may dent growth.
- Nifty IT down 7.3% since visa announcement; workforce and margin strategies closely watched.
Tata Consultancy Services Ltd. (TCS) will become the first major Indian IT firm to report earnings after the recent H-1B visa fee hike and ongoing AI-driven layoffs. The company is scheduled to announce its second-quarter results on Thursday.
India’s largest IT services firm is expected to see a slowdown in revenue growth on a constant currency basis, as overseas clients continue to reduce spending, according to Bloomberg. TCS is also in the midst of mass layoffs aimed at trimming its global workforce by 2%, offering severance packages to employees who cannot adapt to the evolving AI landscape.
Investors will be closely watching TCS’s staffing plans and localisation levels, especially in light of recent US visa changes, Citi analysts said. The Trump administration has raised the H-1B visa fee to $100,000, which will directly impact Indian IT firms that deploy engineers across client offices in the US. TCS is the second-largest user of H-1B visas, although it has been reducing its dependence on them in recent years.
Analysts at Jefferies estimate that the new visa fee could reduce earnings across the sector by 4-13%, as the cost may offset operating profits per employee on the visa. Companies may also face a talent supply crunch, pushing wages higher. Crisil Intelligence expects the added cost to be passed on to clients, limiting the margin impact to 10–20 basis points.
The uncertainty surrounding H-1B fees has already affected market sentiment. Since the announcement on September 19, the NSE Nifty IT index has dropped 7.3%. The sector is also dealing with tighter technology budgets at large US corporations, slower discretionary spending, and increasing competition from global capability centres.
TCS’s Q2 results will be closely watched for insights on how India’s largest IT exporter plans to navigate visa changes, AI adoption, and a challenging global spending environment.
