Trans-Pacific View | Economy | South Asia

What the US PERM Freeze Really Costs India’s IT Industry

The immediate impact of Washington’s decision on green card certification for eight IT employers may be limited, but the freeze adds uncertainty to an immigration system already strained by decades-long queues.

On October 8, 2026, the U.S. Department of Labor decided to stop processing PERM labor-certification requests from eight technology firms, including Microsoft, Adobe, Cognizant, Infosys, Tata Consultancy Services, Wipro, HCL Technologies, and Capgemini. The Department of Labor said it would neither accept new applications nor process pending applications involving the named companies. 

PERM, or Program Electronic Review Management, is the initial step in the employment-based green card process for most immigrants applying under the EB-2 and EB-3 categories. In order to proceed to the next stage, employers are required to prove that they have tried to hire Americans for the jobs in question. 

The processing of the applications has been suspended in accordance with 20 CFR § 656.31(b), which allows for the temporary interruption of services if there are grounds to believe that fraud or willful misrepresentation is involved.  

Vice President J.D. Vance accused companies that employ people on H-1B visas of creating a caste of foreign indentured servants. Notwithstanding the administration’s justification, allegations must not be confused with provided proof of fraudulent activity. 

On the heels of the H-1B controversy came reports of investigations into the J-1 visa program, involving dozens of American universities. In the context of Vance’s comments on H-1B visas and intensified scrutiny of J-1, the latest development suggest that the debate over the United States’ immigration policy and the prospects of its labor market will continue to gain momentum. This would, in the meantime, systematically erode India’s IT service sector’s integrative loop with American companies and vice versa.  

The H-1B-to-green-card process has three basic stages: entering the United States, living there as a worker, and eventually receiving permanent residency. Each of these possesses its own restrictions. 

Indian nationals comprise a significant part of successful H-1B applicants. A U.S. Citizenship and Immigration Services’ FY2024 H-1B characteristics report said that Indians comprised 71 percent of successful applicants in 2024. 

The H-1B has become an IT program. Infotech workers made up 32 percent of H-1B holders in fiscal year 2003 and averaged over 65 percent across the last five fiscal years. H-1B status permits temporary employment, subject to immigration rules and the conditions of the petition. Workers may continue working lawfully while their green card applications are delayed, provided their existing authorization remains valid. 

PERM falls under the third step, which concerns the transition from being a temporary resident to receiving permanent residency. The suspension interrupts a stage of the process for affected applications, potentially delaying workers’ transition to permanent residency. Its consequences depend on the status of each application. 

Given a massive backlog, the PERM suspension impacts individual workers. But its immediate relevance for corporate profits is limited.  

The Cato Institute estimated the U.S. employment-based waiting list to contain approximately 1.8 million people in 2023, around 1.1 million of whom are Indians. This puts the portion of Indians in the queue at around 68 percent. The report estimated the time necessary to clear the backlog for Indian applicants to be up to 134 years, with approximately 424,000 Indians expected to die before obtaining a visa.  

This might have more of an impact than it seems. Permanent residency is a significant factor in the worker’s life, affecting their decision-making and........

© The Diplomat