The US government is suspending several large Indian IT firms from a key programme that allows skilled foreign workers to gain permanent residency. The administration has cited alleged fraud, and claimed that foreign workers got jobs in the US at the cost of American workers.US Secretary of Labor Keith Sonderling said, “I am hereby suspending from the Permanent Labor Certification Program some of the largest IT outsourcing firms in the world — Cognizant, Infosys, Tata, Wipro, HCL, and Capgemini”. The move is a major blow for Indian professionals looking to work at some of these companies in the US.The Permanent Labour Certification Programme in the US, also referred to as PERM (Program Electronic Review Management), is a key provision used by American employers to sponsor foreign workers for permanent residency, with several Indian IT companies also relying on the system.Last month, the US had announced it was suspending Cognizant from the process, but had not mentioned the specific allegations against Cognizant, the number of applications affected or the duration of the suspension..@Sonderling47: “I am hereby suspending from the Permanent Labor Certification Program some of the largest IT outsourcing firms in the world — Cognizant, Infosys, Tata, Wipro, HCL, and Capgemini — and also, due to multiple active federal investigations, @USDOL is suspending Microsoft and Adobe from the program.”— Rapid Response 47 (@RapidResponse47) October 8, 2026The latest action is a clear broadening of the crackdown on foreign workers that has become a central policy under US President Donald Trump. Technology and IT services companies are particularly facing greater scrutiny over their reliance on foreign workers. Apart from the IT services firms, the US has also suspended Microsoft and Adobe from the programme.US authorities have stepped up investigations into alleged misuse of the H-1B and PERM programmes, including claims of wage undercutting, fraudulent filings and displacement of American workers. The scrutiny is especially significant for Indian professionals, who account for a large share of H-1B beneficiaries and employment-based Green Card applicants.Why is US cracking down on Indian IT giants? The key reason behind the suspensions is the US administration’s belief that foreign workers hired by these companies were resulting in fewer jobs for American workers. “…we are ending the fraud that has fuelled reliance on foreign labour. President Trump’s Department of Labour will ensure that American businesses now look first to the most talented workforce in the world, and that’s the American worker,” Sonderling said.Also Read | US suspends Cognizant’s Green Card filings: What is PERM, why does it matter for Indian workers?Story continues below this ad“ This administration knows that American workers are the best and brightest in the world. These jobs that were stolen from them should have gone and will now go to Americans first, not foreigners, and especially not foreign fraudsters… We are cutting off the head of the snake,” he added.Vice President JD Vance announces the suspension of the PERM Program for Microsoft:“Thanks to an ongoing investigation, we have decided to suspend the PERM program for Microsoft, which means they will no longer be able to take those H-1Bs and apply for permanent resident status within the United States of America. Now our message to Microsoft and to any other foreign or domestic corporation is quite simple. We obviously want you to thrive in the United States of America. We want people to invest in the United States of America, particularly the American technology sector. We’re the biggest boosters of your industry. We want you to continue to grow and to employ a lot of people, but we want you to employ American workers. And so our message to Microsoft is, you’re great American company, but you’ve got to hire great American workers. You cannot lay off American workers and then replace them with foreign indentured servants.”— Vice President JD Vance (@VP) October 8, 2026He said that since 2009, the impacted companies have requested permanent residency for almost 3 million foreign workers. “They’ve received over 230,000 H-1B visa approvals, and over 100,000 permanent labour certifications – that’s hundreds of thousands of jobs that were taken from American workers,” Sonderling said.What is PERM?PERM, or Program Electronic Review Management, is the system through which employers generally obtain labour certification before sponsoring a foreign employee for an employment-based Green Card. Unlike a visa application, which is primarily made by an individual, the PERM filing is done by the employer on behalf of the worker.Also Read | US again eyes $100k H-1B fee: How Indian workers, IT firms will be hitBefore filing, an employer must obtain a prevailing wage determination for the position and carry out prescribed recruitment. Broadly, the process is intended to establish that hiring a foreign worker permanently will not adversely affect the job opportunities, wages or working conditions of US workers. Once the Labour Department certifies the application, the employer can proceed to the next stage of the Green Card process.Story continues below this adThe date on which the Labour Department accepts the labour certification application also generally becomes the worker’s “priority date”, which is effectively their place in the queue for an employment-based immigrant visa. This is particularly important for workers from countries such as India, where demand for Green Cards far exceeds the number available.Also Read | Why US is cracking down on a post-study work programme that Indians depend on for H-1B visasIt is different from an H-1B visa, which is a temporary, non-immigrant work visa that allows US employers to employ foreign professionals in speciality occupations. PERM, in contrast, is part of the process for obtaining permanent residency.How will action against Cognizant affect Indian workers?For employees of these IT giants whose Green Card process has not yet reached the PERM filing stage, the immediate consequence is a delay. The suspension means they cannot make fresh PERM filings while the suspension remains in place, meaning affected employees cannot secure a priority date and begin moving through the employer-sponsored Green Card process.Story continues below this adThat can be particularly consequential for Indians because they already face a severe backlog. In the US State Department’s September 2026 Visa Bulletin, the employment-based second preference, or EB-2, category for India was listed as “unavailable” for final action, while the EB-3 final-action date was January 1, 2014. The system also imposes limits on the number of employment-based Green Cards available to nationals of any one country.Also Read | How US’s tighter Green Card rules will affect Indians — and the options before themThere can also be an H-1B implication for some workers approaching the normal six-year limit on that visa. US rules allow certain H-1B holders to extend their stay beyond six years where a labour certification was filed sufficiently early. An inability to get the PERM process started could therefore become more serious for employees nearing that deadline. Workers who already have approved petitions and are waiting because a Green Card number is unavailable are in a different position and can, subject to the rules, qualify for H-1B extensions of up to three years at a time.