Global ratings agency Moody’s has released an insightful report analyzing the potential impact of U.S. President Donald Trump’s tariff policies on South and Southeast Asian companies including TCS and Infosys.
Among the sectors affected, Indian IT giants Tata Consultancy Services (TCS) and Infosys have been highlighted as relatively well-positioned to withstand the challenges posed by these policies.
The report sheds light on the broader implications of U.S. tariffs and immigration policy changes on the IT services industry.
The Trump administration’s tariff policies have targeted various sectors, including automotive, steel, chemicals, and business services.
While IT services are not directly subject to tariffs, the industry faces indirect challenges, particularly through changes in U.S. immigration policies.
Moody’s report emphasizes that stricter immigration rules could shrink the talent pool for IT firms, which rely heavily on skilled foreign workers.
TCS and Infosys: Resilience Amid Challenges and Role of H-1B Visas
TCS and Infosys, two of India’s largest IT services providers, have been identified as better equipped to absorb the increased costs associated with U.S. policy changes.
Moody’s attributes this resilience to their industry-leading profitability and diversified operations.
Both companies have proactively increased onshore hiring in the U.S. to mitigate the risks posed by stricter immigration rules.
The report highlights the critical role of H-1B visas in the IT services industry.
Indian nationals accounted for nearly 75% of H-1B visas issued in 2023, underscoring the industry’s reliance on skilled foreign workers.
TCS and Infosys have been significant beneficiaries of this program, enabling them to deploy talent for long-term U.S. assignments.
However, changes in immigration policies could pose risks to their operations.
Financial Implications and Industry-Wide Impact
Despite their strong positioning, TCS and Infosys are not immune to the financial pressures stemming from U.S. policy changes.
Infosys, for instance, has seen its valuation premium narrow in recent months.
The company’s stock now trades at a lower multiple compared to peers like TCS and HCL Technologies.
Revenue concerns and potential discretionary tech spending cuts have further added to the challenges.
The broader IT services industry in South and Southeast Asia faces varying levels of exposure to U.S. tariffs and policy changes.
Moody’s report notes that most corporate sectors in the region have sufficient mitigants, such as strong domestic operations and diversified supply chains, to withstand the impact.
However, the IT services sector remains vulnerable due to its reliance on skilled foreign labor.
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