The vice chairman at one of India’s largest technology services companies warned that US President Donald Trump’s visa policies will damage the industry as his company reported weak earnings and his stock fell the most in almost two years. Tech Mahindra Ltd. said net income was 5.9 billion rupees ($91 million) in the fourth quarter, compared with the average analyst estimate of 7.8 billion, according to estimates compiled by Bloomberg. Shares fell as much as 17 percent and traded 12 percent lower at 1:18 p.m. local time, the largest intraday decline since May 2015.
The U.S. is tightening the criteria for visa programs that Tech Mahindra and other outsourcing companies use to bring skilled foreign workers into the country. Trump and other politicians have criticized the programs for hurting American workers and allowing companies to use cheaper employees from abroad.
“Trump’s America First agenda and focus on curbing the immigration, especially around H-1B visa policies, will hurt the IT sector,” Vice Chairman Vineet Nayyar said on a conference call. “The norms propose a radical shift in policies related to visa quotas and allotment, thereby, leading to a tougher application procedure and higher cost of Indian IT companies looking to bring talent to the United States.”
Several analysts cut their ratings and price targets for Tech Mahindra after it reported results, including those at JPMorgan Chase & Co. and Morgan Stanley. Vibhor Singhal of Phillip Securities Pte reduced shares to a sell rating and slashed the price target to 380 rupees.
Tech services companies, including Cognizant Technology Solutions, have been cutting positions in India. Some workers have blamed Trump for prompting the job losses and exacerbating problems in the industry.
Workers have begun debating whether to form the first industrywide IT union. Trade unions are common in India in manufacturing and transportation, but they never had much success in information technology because pay and benefits had historically been good.
“These are unsettling times in both in – on politics and economics of both Europe and U.S.,” said Nayyar. “However, the demand for technological services continues unabated. We do believe that as always, given our resilience, we will be able to see through – see our way through this current fog.”