The US Department of Labor has suspended eight of the world’s best-known technology and IT services companies from the first step of employer-sponsored green cards, in a move that could reshape how the industry hires, relocates and retains talent. Labor Secretary Keith Sonderling announced the action on Thursday, October 8, 2026, in the presence of Vice President JD Vance.

“I am hereby suspending from the Permanent Labor Certification Program some of the largest IT outsourcing firms in the world,” Sonderling said. The department will not “accept any new or process any pending permanent labour certification applications involving these companies.”

Who is affected, and what exactly is frozen

Reports differ slightly on the list. Sonderling’s quoted remarks named Cognizant, Infosys, Tata, Wipro, HCL and Capgemini, and Reuters, as carried by The Tribune, and Visaverge report that Microsoft and Adobe were also suspended. Sonderling cited “multiple active federal investigations” in the case of Microsoft and Adobe, according to Outlook Business. The pitch the story rests on lists TCS, Infosys, Wipro, HCLTech, Cognizant, Capgemini, Microsoft and Adobe.

The suspension covers the Permanent Labor Certification (PERM) programme, the first step in an employer-sponsored green card. Without a certification, affected employees may be unable to establish a priority date, which fixes their place in the green card queue. The Tribune notes that existing H-1B visas are not automatically cancelled, and Visaverge adds that previously approved PERM certifications and approved I-140 petitions are also untouched. But employees approaching the six-year H-1B limit could face complications, and Indian nationals are especially exposed because employment-based green cards carry country-specific limits and long backlogs.

The stated reason is the administration’s allegation that some companies misused employment-based immigration programmes to hire foreign workers at the expense of Americans and to suppress wages. Vance said of Microsoft: “There has been no company in the United States, unfortunately, that has abused this system more than Microsoft,” and claimed that H-1B workers earn $20,000 less than comparable American workers. Sonderling cited figures for the companies as a group since 2009: almost three million foreign workers requested, more than 230,000 H-1B approvals and more than 100,000 permanent labour certifications. These are the government’s figures and allegations; the announcement does not establish wrongdoing by every company named. The reports reviewed here give no duration for the suspension, no appeal process and no count of affected workers.

A pattern, not a one-off

The move follows Cognizant’s suspension on September 8, announced by Labor Inspector General Anthony D’Esposito, who also announced the suspension of Cloudera’s PERM filings. “Threats to American workers will NOT be tolerated,” he wrote, adding “Handcuffs await.” A Mayer Brown legal update says the suspension rests on 20 CFR § 656.31, which allows PERM filings to be suspended until an investigation is complete, and describes it as an administrative step, not a criminal charge. It also describes a wider enforcement push: Project Firewall, launched in September 2025 and reportedly leading to about 200 investigations into H-1B abuse, and a July 2026 inspector general probe into H-1B and PERM fraud. Outlook Business reports that the administration is also investigating nine universities over alleged J-1 visa misuse.

How the companies responded

TCS said it will comply with any Labor Department directive and that its “PERM applications were in single digits in the last two years,” adding that it expects no impact on its workforce strategy or customer engagements. It said its US strategy is anchored in local hiring and that it plans to hire 15,000 people in the US over five years. The reports reviewed here carry no statements from Infosys, Wipro, HCLTech, Capgemini, Microsoft or Adobe. The day before its own suspension, Cognizant announced plans to hire 1,500 American graduates, and CEO Ravi Kumar S said the company is “hiring American graduates.”

Markets offered no clear signal. Upstox reports that the Nifty IT index closed 0.08% lower on October 8 after rising as much as 2.2% during the session, a gain it attributes to investors positioning ahead of TCS’s results, not to the PERM news.

What it means for the IT industry

What follows is analysis based on the facts above, not reported fact. The first effect is on the onsite-heavy model. Services firms have long used US placements as a retention tool; if the green card path is frozen, an assignment in the US becomes less attractive to the skilled people firms most want to keep. The second is a shift towards local hiring in the US, which TCS and Cognizant had already begun to announce. The third is compliance: Mayer Brown advises employers to audit H-1B and PERM filings, review wages and recruitment, and set up whistleblower channels, as DOJ’s whistleblower programme now covers immigration violations. And because Microsoft and Adobe are on the list, the signal is that scrutiny is not limited to Indian outsourcers.

The GCC angle

Divesh Agarwal, Founder and CEO of Aumni, a Pune-based firm that helps global companies build engineering teams in India, outlines: “Indian IT services will feel the squeeze on onsite-heavy models, but the real shift is towards offshoring and GCCs here in India. Offshore fails when it’s treated like a vendor. When the offshore team feels like part of your product organization, it works. More global careers will now start from India. For India, it’s a great chance to retain skilled people, strengthen our engineering capabilities, and take greater ownership of global products.”

The case is plausible but not yet proven. India already hosts 2,117 global capability centres operating 3,728 units, employing more than 2.36 million people, with estimated FY26 revenue of $98.4 billion, according to an Awfis-Zinnov report released in August. Nearly half of the GCCs do an equal or greater share of frontier work than their headquarters. The sector was growing before this suspension, so any extra boost depends on how long the freeze lasts and whether it widens. The reports reviewed here do not say.

What to watch

Whether other firms are added; how long the suspension runs; whether any company is charged; how many individuals are stuck mid-process; and what companies do about employees already in the queue. Until then, the practical advice is for affected workers to speak to their employer’s immigration counsel about the stage of their case.