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Mutual Funds Trim Tech Bets as Visa Fees and Wage Pressures Darken Outlook
- Ripradaman R
- 2 hours ago
- 2 min read
Introduction
Mutual funds are turning cautious on the technology sector.
Rising visa-related costs and wage pressures are hurting earnings visibility.
Policy uncertainty in the US is adding to the concern.
As a result, Indian IT is seeing reduced allocations.
Why Mutual Funds Are Cutting Tech Exposure
Fund managers are reassessing risk-reward in IT stocks.
Key reasons include:
Rising employee and onsite costs
Policy-driven uncertainty in key export markets
Slower discretionary tech spending
The sector no longer offers clear near-term comfort.
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Impact of Visa Fees and Immigration Policies
Visa-related costs are a major headwind.
Concerns stem from:
Higher H-1B visa fees
Increased compliance costs for overseas staffing
Dependence on onsite deployment models
Policies associated with Donald Trump have re-entered market calculations.
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Wage Inflation Pressures Margins
Employee costs remain elevated.
Key challenges:
Persistent wage hikes in India
Competition for digital talent
Limited pricing power with clients
Margins are under sustained pressure.
Outsourcing Taxes Add to Uncertainty
Tax-related risks are compounding concerns.
Possible implications:
Higher cost of US operations
Reduced profitability of offshore contracts
Repricing of long-term deals
Visibility on earnings remains weak.
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Indian IT Sector Outlook
The outlook has turned cautious, not bearish.
What fund managers see:
Near-term earnings risk
Selective stock-specific opportunities
Preference for companies with strong balance sheets
Broad-based re-rating looks unlikely for now.
How Mutual Fund Strategies Are Changing
Portfolio positioning reflects caution.
Key shifts include:
Underweight positions in large IT names
Rotation toward domestic-focused sectors
Higher emphasis on valuation discipline
Risk management is taking priority.
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Conclusion
Mutual funds are trimming technology exposure amid rising cost pressures.
Visa fees, wage inflation, and tax uncertainty are clouding earnings outlooks.
Until visibility improves, fund managers are likely to stay selective on IT.
FAQ
Q1. Why are mutual funds reducing exposure to IT stocks?
Due to rising costs, policy uncertainty, and weaker earnings visibility.
Q2. How do visa fees affect Indian IT companies?
They increase onsite staffing costs and compress margins.
Q3. Are all IT stocks equally impacted?
No. Companies with diversified revenue and strong pricing power fare better.
Q4. Is this a long-term negative for Indian IT?
Not necessarily. It is a cyclical and policy-driven phase.
Q5. What are fund managers preferring instead of IT?
Domestic consumption, financials, and sectors with stable earnings visibility.
Citations
Association of Mutual Funds in India (AMFI)
Industry Analyst Reports
US Immigration Policy Briefs
Indian IT Sector Earnings Commentary
Global Investment Research Notes
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