Washington has suspended India’s top outsourcing companies from the Permanent Labor Certification programme. Infosys, TCS, Wipro, HCL, Cognizant and Capgemini cannot sponsor new green cards while the freeze lasts; Microsoft and Adobe are also barred amid federal investigations.
BY PC Bureau
October 8, 2026: The Trump administration has suspended some of the world’s largest IT companies — including India’s Tata Consultancy Services (TCS), Infosys, Wipro, HCLTech and U.S.-based Cognizant — from the U.S. Department of Labor’s Permanent Labor Certification, or PERM, programme, sharply escalating its crackdown on the use of foreign workers.
Microsoft and Adobe have also been suspended from the programme, with Labor Secretary Keith Sonderling citing multiple active federal investigations in the case of the two U.S. technology companies.
The announcement was made by Sonderling alongside Vice President JD Vance on Thursday. Sonderling said the Labor Department would suspend the six major IT outsourcing firms — Cognizant, Infosys, Tata, Wipro, HCL and Capgemini — and separately suspend Microsoft and Adobe.
He said the department would “not accept any new or process any pending permanent labor certification applications” involving the affected companies.
The move is significant for thousands of foreign technology workers, particularly Indians, whose employers use PERM as part of the process of sponsoring them for employment-based green cards.
The PERM process is generally required for employment-based EB-2 and EB-3 cases in which a U.S. employer must first obtain Labor Department certification before filing the immigrant petition with U.S. Citizenship and Immigration Services (USCIS). The employer must demonstrate that there are not sufficient U.S. workers able, willing, qualified and available for the job and that employing the foreign worker will not adversely affect wages and working conditions of similarly employed U.S. workers.
READ: Is Ambani the real boss of India? asks Musk; Rahul says wait till you know the other guy
What the Suspension Means
The action is a freeze on PERM processing, not a cancellation of existing green cards or H-1B visas.
The affected companies cannot submit new PERM applications or have pending applications processed while the suspension remains in force, according to Sonderling’s announcement. The duration of the suspension has not been specified.
It also does not amount to a suspension of the H-1B programme itself. H-1B is a separate temporary non-immigrant work programme, while PERM is part of the permanent-residence process.
A worker already holding an H-1B visa therefore does not automatically lose that status because the employer has been suspended from PERM. The immediate issue is the worker’s employer-sponsored route towards permanent residence.
Similarly, a PERM suspension does not by itself revoke an already approved green card or a previously certified PERM application. Its immediate effect is on new and pending labour-certification applications.
Sonderling Targets Major IT Outsourcers
Sonderling said the companies being suspended represent some of the world’s largest users of foreign labour.
He said that since 2009, the companies named in the action had collectively sought nearly 3 million foreign-worker certifications, received more than 230,000 H-1B approvals and obtained more than 100,000 permanent labour certifications.
The figures were cited by Sonderling at the announcement and form part of the administration’s case that the foreign-worker system has been abused at the expense of American employees.
The allegations, however, should be distinguished from established findings of wrongdoing by every company named in Thursday’s action. A suspension during an investigation is not, by itself, a finding that a company has committed fraud.
That distinction is particularly important because the companies have been grouped together in a much broader enforcement action, while the administration has cited different reasons for the individual suspensions.
.@Sonderling47: “I am hereby suspending from the Permanent Labor Certification Program some of the largest IT outsourcing firms in the world — Cognizant, Infosys, Tata, Wipro, HCL, and Capgemini — and also, due to multiple active federal investigations, @USDOL is suspending Microsoft and Adobe from the program.”
— Rapid Response 47 (@RapidResponse47) October 8, 2026
Microsoft Comes Under Particular Fire
Vance singled out Microsoft for criticism.
He accused the company of laying off thousands of American workers while continuing to seek foreign workers through the immigration system.
Vance said Microsoft had laid off roughly 6,000 American workers in 2025 and subsequently obtained more than 6,000 H-1B approvals. He also alleged that the company had filed thousands of PERM applications, including applications for positions corresponding to jobs held by some of the workers who had been laid off.
Vance used particularly strong language in describing the administration’s allegation, saying that “for every worker that Microsoft laid off, they replaced that worker with one and a half foreign indentured servants.”
Those figures and the characterisation of the workers are Vance’s allegations, not independently established findings. Microsoft had not immediately responded to requests for comment in initial reports. Reuters and AP both reported the suspension and the administration’s allegations.
Sonderling went further, saying that no U.S. company had abused the system more than Microsoft.
The administration has linked Microsoft’s suspension to multiple active federal investigations.
Adobe has also been suspended, with Sonderling citing the existence of active federal investigations.
The Cognizant Precedent
Thursday’s action follows the Labor Department’s September suspension of Cognizant’s PERM filings amid an investigation into alleged fraud and misuse of employment-visa programmes.
The September action triggered a sharp sell-off in Indian technology stocks. Indian IT companies lost approximately ₹55,000 crore in combined market value in a single session, according to contemporary market reports, with Infosys, HCL Technologies, Tech Mahindra, TCS and Wipro among the companies hit.
The Cognizant case therefore served as an early warning that the administration’s immigration crackdown could extend beyond H-1B visas to the permanent-residency pipeline.
Thursday’s decision makes clear that the scrutiny is now much broader.
Why the Move Matters to Indian IT
The decision is particularly significant for Indian technology workers because Indians account for a dominant share of H-1B beneficiaries.
According to the latest USCIS annual characteristics report, 71% of H-1B petitions approved in fiscal 2024 were for beneficiaries born in India, compared with about 12% for China.
The large Indian IT services companies have historically used the H-1B system to place skilled employees at U.S. client sites, while employer-sponsored permanent residence provides a longer-term retention mechanism.
The suspension could therefore have several consequences.
Longer Green-Card Timelines
For Indian professionals whose employers are sponsoring them for permanent residence, a suspension could delay the start or progression of the PERM stage.
This is especially important for Indian workers because employment-based green-card backlogs can already extend for many years.
A prolonged suspension could make it harder for companies to retain employees who have spent years building careers in the United States.
Pressure on the Indian IT Model
The action could also accelerate a trend that was already under way: reducing dependence on the traditional model of moving Indian engineers to the United States and instead delivering more work from India.
Indian IT companies may respond by increasing local U.S. hiring, expanding offshore delivery, shifting work to other locations or relying more heavily on automation and artificial intelligence.
The effect could be mixed.
Greater offshore delivery could strengthen India’s role as a technology-delivery hub, but reduced onsite deployment could also affect the economics of projects and the ability of companies to move experienced personnel between India and the United States.
A Broader Immigration Crackdown
The PERM action comes after a series of moves by the Trump administration targeting foreign-worker programmes.
The administration has already intensified scrutiny of H-1B visas and other employment-based immigration channels. The latest action indicates that the focus is no longer limited to the temporary work-visa system.
It now extends to the permanent-residency pipeline used by employers to retain foreign workers in the United States.
Universities Also Under Investigation
The administration also announced investigations into nine universities over alleged misuse of international-student and J-1 visa programmes.
The institutions named include Harvard, Yale and Stanford.
Labor Inspector General Anthony D’Esposito said subpoenas had already been issued as part of investigations into whether international workers or students were being used in ways that suppressed wages for American workers.
The university investigations indicate that the administration is examining foreign-worker programmes across multiple sectors rather than focusing solely on technology outsourcing.
Market Reaction
The latest announcement immediately put pressure on Indian technology stocks in U.S. trading.
Infosys ADRs fell about 3.1%, Wipro ADRs about 2.4%, while Cognizant shares fell about 3% at one point, according to market reports during Thursday’s trading session.
The reaction reflects investor concern that the policy could affect companies’ ability to move and retain skilled employees in their largest overseas market.
However, the ultimate financial impact will depend heavily on the duration of the suspensions and whether the administration expands the action to other employers or immigration programmes.
What It Means for Indians Already on H-1B
For Indian technology workers already in the United States, the immediate message is more nuanced than a simple loss of visa status.
An H-1B worker does not automatically lose H-1B status because the employer has been suspended from PERM.
The immediate impact is on the employer’s ability to start or continue the PERM labour-certification process for the affected worker.
For workers who have not yet begun PERM, the suspension could prevent their employers from starting the process.
For workers whose PERM applications are already pending, processing is now frozen under the Labor Department’s announcement.
For workers who have already completed PERM and moved further along the green-card process, the consequences may be different depending on the stage of the individual case.
That distinction is critical: PERM suspension is not the same thing as H-1B cancellation or green-card revocation.
The Bigger Message
The Trump administration is increasingly arguing that the U.S. immigration system should be used only where employers genuinely cannot find qualified American workers.
The PERM programme itself is designed around precisely that principle. The Labor Department says its role is to determine whether sufficient U.S. workers are available and whether employing foreign workers would adversely affect American workers’ wages and conditions.
The administration’s new approach, however, is significantly more aggressive.
By suspending some of the world’s largest technology employers from the permanent labour-certification system, Washington is effectively putting the companies’ foreign-worker hiring practices under a microscope.
For India, the implications are particularly important.
The country’s IT industry has spent decades building a business model around the movement of skilled professionals between India and the United States. That model has already been changing because of automation, artificial intelligence, local hiring and the expansion of global capability centres.
The latest U.S. action could accelerate that transformation.
For Indian IT companies, the question is no longer simply how many H-1B visas they can obtain. It is increasingly how much of their U.S. business can be delivered without relying on the traditional visa-to-green-card pipeline.
And for thousands of Indian professionals in the United States, the immediate concern is whether a temporary PERM freeze becomes another delay in an already extraordinarily long journey towards permanent residence.
