On October 8, 2026, the US Department of Labor suspended eight major technology companies, including Cognizant, TCS, Infosys, Wipro, and HCL, from the Permanent Labor Certification (PERM) program, the foundational legal step for employment-based green card sponsorship.
The freeze triggered an immediate market sell-off, wiping out roughly Rs 55,000 crore in Nifty IT market capitalization in a single session. It does not cancel existing H-1B visas, but it blocks new and pending PERM filings from the suspended firms. This guide covers the full timeline, market impact, TCS's corporate response, and the practical options available to affected H-1B workers.
Timeline and Federal Investigation
Cognizant was suspended first, on September 9, 2026, over an H-1B and PERM fraud investigation. The freeze expanded to seven more firms on October 8, 2026, announced by Vice President JD Vance and Labor Secretary Keith Sonderling.
The regulatory action began weeks before the broader announcement. Cognizant faced an isolated suspension on September 9, 2026, stemming from an active H-1B and PERM fraud investigation. The probe was led by Labor Department Inspector General Anthony D'Esposito, working with the White House Fraud Task Force.
Following preliminary findings from that probe, the Department of Labor escalated the restriction on October 8, 2026. It now covers seven additional multinational technology and IT services providers.
The Department of Labor released cumulative tracking data for the suspended corporations. Since 2009, these firms collectively requested approximately three million foreign workers, securing over 230,000 H-1B approvals and exceeding 100,000 PERM certifications.
Labor Secretary Sonderling characterized this volume as hundreds of thousands of jobs diverted from the domestic American workforce.
Which Companies Are Suspended
Eight companies are currently suspended from PERM filings.
| Company | Suspension Date |
|---|---|
| Cognizant | September 9, 2026 |
| TCS (Tata Consultancy Services) | October 8, 2026 |
| Infosys | October 8, 2026 |
| Wipro | October 8, 2026 |
| HCL Technologies | October 8, 2026 |
| Capgemini | October 8, 2026 |
| Microsoft | October 8, 2026 |
| Adobe | October 8, 2026 |
What Exactly Is Suspended
The freeze targets the Permanent Labor Certification (PERM) process, the foundational legal prerequisite for employers sponsoring foreign nationals for employment-based green cards. Under the directive, the Department of Labor will neither accept new PERM applications nor advance pending filings submitted by the listed companies.
How a PERM Audit and Freeze Actually Works
The suspension is not a single switch. It halts a three-phase Department of Labor vetting process that every PERM application must normally pass through before a green card sponsorship can begin.
| Phase | What It Normally Does | Status Under the Freeze |
|---|---|---|
| Phase 1: Prevailing Wage Determination | Sets the minimum wage the employer must offer for the role, based on occupation and geography | New wage determinations for frozen employers are not being calculated |
| Phase 2: 30-day domestic recruitment | Employer must advertise the role domestically and document the search before filing | Recruitment records remain subject to audit even while new filings are frozen |
| Phase 3: ETA Form 9089 electronic filing | The actual PERM application filed with the Department of Labor | Filing system blocks the Employer Identification Numbers of the suspended companies, halting both new submissions and movement on existing queues |
Market Impact: Rs 55,000 Crore Wiped Out
The announcement triggered an immediate sell-off across Indian IT equities. The Nifty IT index dropped approximately 3% in a single trading session, wiping out roughly Rs 55,000 crore in aggregate market capitalization.
| Company / Index | Single-Session Fall | Strategic Response |
|---|---|---|
| Nifty IT Index | ~3% | Broad industry compliance recalibration |
| Infosys & Coforge | ~6% each | Accelerated onsite talent diversification |
| TCS | ~2.5% | Hiring 15,000 local US staff over 5 years |
| Wipro, Mphasis, LTIMindtree | Up to 2.5% | Portfolio rebalancing and local hiring |
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Corporate Response: TCS Clarifies Minimal Exposure
Tata Consultancy Services issued a formal clarification on October 9, 2026, stating its PERM application volume remained in single digits over the preceding two years, limiting its direct exposure. TCS said the suspension will not disrupt workforce strategy, project execution, or client engagements, and reaffirmed a commitment to hire 15,000 local professionals in the United States over the next five years.
As of October 9, 2026, formal statements from the other impacted firms, industry bodies like NASSCOM, or the Indian Ministry of External Affairs remain pending.
What This Means for H-1B Workers
The practical impact on an individual H-1B worker depends heavily on where they stand in the green card process.
If you have an approved I-140
Your priority date is protected under AC21 once your I-140 has been approved for 180 or more days. The PERM freeze cannot revoke it. You can extend your H-1B status indefinitely or transfer to another employer while keeping your place in the green card queue.
If your PERM application is still pending
Your filing will not advance while the freeze is in effect. Three options exist: wait for the freeze to lift, transfer to an unrestricted employer and file a fresh PERM there, or apply for an EB-2 NIW or EB-1A green card pathway that bypasses PERM entirely.
If you are in years one to three of your H-1B
You have more runway. The standard H-1B is valid for six years. If the freeze resolves before your fourth year, the delay may not matter much. If it extends longer, start evaluating external transfers before you approach the six-year limit without a green card path in place.
Compliance Matrix: Your Risk by Scenario
The freeze does not treat every worker the same way. Where you fall in this matrix determines how urgently you need to act.
| Scenario | Current Status | Risk | Suggested Action |
|---|---|---|---|
| H-1B holder, years 1-3 | Valid non-immigrant status | Low near-term, high long-term | Monitor the freeze; prepare a transfer plan before year 4 |
| Pending PERM, no I-140 filed | Administrative limbo, processing frozen | Critical | Transfer to an unrestricted employer, or pursue EB-2 NIW / EB-1A |
| Approved I-140, under 180 days | Priority date established but not yet locked | Moderate | Maintain status; prepare an external transfer as a backup |
| Approved I-140, 180+ days | Priority date permanently locked under AC21 | Low | Extend H-1B indefinitely, or port to a new employer freely |
| H-4 dependent spouse EAD | Valid only if tied to an approved I-140 or a PERM pending 365+ days | High if primary PERM is frozen | Track the primary worker’s status closely; renewal can lapse if thresholds are not met |
Alternative Visa and Green Card Pathways
EB-2 National Interest Waiver
Professionals with an advanced degree or exceptional ability can self-petition for an EB-2 green card under the National Interest Waiver, bypassing employer sponsorship and PERM entirely. The applicant must show the work has substantial merit and national importance to the US. Many tech professionals, researchers, and engineers qualify.
EB-1A Extraordinary Ability
Tech leads and researchers who can document sustained national or international acclaim, original contributions, or high compensation can pursue an EB-1A green card without employer sponsorship or PERM. This category is typically reserved for industry leaders and published researchers.
L-1A intra-company transfer
Managers or executives at firms with global operations can transfer to an international office for at least one continuous year, then return to the US on an L-1A visa. This can later convert to an EB-1C green card, which does not require PERM.
H-1B transfer under AC21 portability
Even with a frozen PERM at your current employer, you can transfer your H-1B to a new, unrestricted employer under AC21. If you already have an approved I-140 or a PERM pending past 180 days, your priority date carries over, and the new employer can file a fresh PERM while you keep your place in the queue.
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Action Checklist for Affected H-1B Workers
| Step | Action |
|---|---|
| Step 1 | Request certified copies of your approved I-140, pending PERM filing, and H-1B approval notice from your employer’s immigration counsel. |
| Step 2 | Calculate your H-1B timeline: how much of your six-year limit remains, and check for recapturable time spent outside the US. |
| Step 3 | Clarify your status with HR: confirm whether your PERM is frozen or whether you already hold a protected, approved I-140. |
| Step 4 | Consult independent immigration counsel to assess eligibility for EB-2 NIW, EB-1A, or an H-1B transfer. |
| Step 5 | Explore transfer opportunities at unrestricted employers if the freeze looks indefinite, while your priority date stays intact. |
Long-Term Implications for the Tech Sector
This enforcement action reshapes the financial and operational landscape for global IT service providers.
- Shift toward local onshoring: companies will accelerate hiring local US talent, following TCS's 15,000-hire commitment.
- Margin compression: domestic US wages run significantly higher than visa-sponsored personnel costs, pressuring operating margins.
- Nearshore diversification: firms will invest in nearshore hubs in Canada and Latin America to maintain delivery without visa dependencies.
- Compliance overhead: tighter audit infrastructure becomes a cost of doing business across the sector.
Workers weighing a return to India, whether permanent or as a contingency, can compare take-home pay and tax outcomes using the old vs new tax regime calculator before making a decision.
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Frequently Asked Questions
Disclaimer: This article is for general information and is not immigration or legal advice. PERM suspension status, investigation outcomes and company statements can change quickly. Verify the current position with the US Department of Labor or an independent immigration attorney before making decisions based on it. Fermor is not an immigration advisory firm.