Infosys says US PERM suspension should not materially affect operations

Infosys Limited (NSE: INFY; BSE: 500209; NYSE: INFY) says it does not currently expect a material impact on operations from the United States Department of Labor’s suspension of new and pending Permanent Labor Certification applications involving the company. Infosys disclosed its response on October 10 after the US government included it among several major technology and IT services groups affected by the action.

PERM is a labour-certification process commonly used when an employer sponsors a foreign employee for employment-based permanent residency. The suspension therefore restricts an important route toward a green card for affected workers, but it is not equivalent to cancellation of existing H-1B visas and does not by itself remove employees from their current jobs.

That distinction is central to evaluating the immediate corporate consequence. Infosys says it has invested in building a strong local US workforce and innovation hubs and, based on its preliminary assessment, does not anticipate a material effect on operations. The longer-term question is whether reduced access to permanent residency makes it more difficult or expensive to retain specialised foreign-born employees in the United States.

What has actually been suspended for Infosys employees in the United States?

The Department of Labor action concerns new and pending applications under the PERM programme involving targeted employers. PERM is normally an early employment-certification stage in many employer-sponsored green-card cases, requiring the employer to satisfy labour-market requirements before the worker advances through later immigration steps.

The action does not automatically revoke H-1B visas already held by employees. H-1B is a separate non-immigrant work-visa category, while PERM is associated with the permanent-residency process, so treating the suspension as a broad cancellation of Infosys employees’ legal working status would materially overstate the development.

Workers can nevertheless be affected even when they remain authorised to work. An employee hoping to transition from temporary work status toward permanent residency may face delay or uncertainty if the employer cannot progress a PERM application.

That can eventually become a retention issue because highly skilled workers consider immigration stability when deciding whether to remain with an employer, move to another company or relocate to another country. The immediate operational impact and the longer-term human-capital impact are therefore separate questions.

Why does Infosys believe its US delivery model can absorb the restriction?

Infosys has spent years reducing reliance on a model in which large numbers of employees were transferred from India to work temporarily at US client sites. The company expanded local recruiting, delivery centres and innovation hubs partly in response to client demands, political scrutiny and changes in immigration policy.

That shift gives management confidence that the latest PERM action does not automatically disrupt client projects. A substantial portion of work can be performed by locally hired employees, distributed global teams or staff whose current work authorisation is unaffected by the suspension.

Infosys remains a huge global employer, with 328,594 group employees at March 31, 2026. A workforce of that size gives the company more options to allocate projects geographically, although individual client roles can require specific local expertise, security clearance or proximity that makes substitution more complicated than moving work between offices.

The company’s “no material impact” statement should also be classified correctly. It is a preliminary management assessment, not an independent regulatory determination or proof that no employee will face disruption.

Materiality at corporate level can coexist with meaningful consequences for individual workers whose permanent-residency plans are delayed.

Why is the US government targeting PERM applications at major technology employers?

The administration has alleged that some employers have misused skilled-worker and labour-certification systems while simultaneously reducing US-based jobs. Those are government allegations and policy justifications rather than findings that every affected company has committed wrongdoing.

Infosys has said it intends to cooperate with the Department of Labor and other agencies and address questions raised by authorities. The company has not said that the suspension changes its commitment to the US market.

Several other large technology and IT-services companies have been affected, broadening the issue beyond one employer. That industry-wide dimension matters because a restriction applying across multiple competitors may affect the relative labour market differently from a sanction imposed only on Infosys.

If competitors face similar constraints, no single outsourcing group necessarily gains an immediate labour advantage. The larger consequence may instead be greater localisation, higher recruitment costs and stronger competition for workers who already possess unrestricted US employment rights.

Could the PERM suspension eventually increase costs even without disrupting revenue?

Yes, because immigration policy can influence workforce economics before it becomes visible in sales. Greater dependence on local hiring in high-cost US labour markets may increase salary expense, particularly for specialised technology, consulting and AI roles.

Companies can offset some of that pressure through automation and offshore delivery, but clients sometimes require work to be performed inside the United States for regulatory, security or operational reasons. Those contracts limit how much labour can simply be moved to lower-cost locations.

The restriction may also affect employee retention. A worker whose permanent-residency pathway becomes uncertain may seek employment at a company not subject to the suspension, provided another immigration route is legally available.

Those effects would develop over time rather than appearing immediately in quarterly results. Investors should therefore distinguish management’s current conclusion that operations are not materially affected from the possibility that recruitment, retention and compliance expenses eventually rise.

That distinction preserves the significance of the policy change without implying that Infosys’s US business has suddenly become unable to deliver client work.

What should investors watch next in the Infosys-US immigration dispute?

The first issue is duration. A temporary suspension resolved after regulatory engagement would have very different consequences from a prolonged restriction affecting several recruitment cycles.

The second is scope. Further government clarification could establish whether applications already deep into processing are treated differently, what remediation authorities require and whether additional immigration programmes become affected.

Infosys’s workforce disclosures will provide another useful signal. A sharp change in US local hiring, onsite employee costs or attrition could indicate that immigration restrictions are having a larger economic impact than the preliminary assessment suggested.

For now, the most defensible conclusion is narrower. Infosys has lost access, at least temporarily, to an important employer-sponsored permanent-residency pathway for affected cases, but the company says its broader operating model is sufficiently localised and diversified that it does not expect the suspension itself to materially disrupt operations.