The US President Donald Trump is all set to deliver a body blow to the Indian information technology (IT) services industry as his administration has drafted an executive order that will overhaul the work visa programmes.

Bloomberg reported on Monday, following similar reports last week, that the executive orders could seek to curb the long term H-1B visas, and the short term L-1, E-2 and B1 visas.

Indian IT companies have long been a beneficiary of the H-1B work visas for transfer of skilled workers. About 300,000 to 350,000 Indian engineers are on H-1B visas in the US, according to industry estimates. ''Our country’s immigration policies should be designed and implemented to serve, first and foremost, the US national interest,'' the draft proposal reads, according to Bloomberg. ''Visa programs for foreign workers…should be administered in a manner that protects the civil rights of American workers and current lawful residents, and that prioritises the protection of American workers - our forgotten working people - and the jobs they hold.''

The US is also Indian IT’s largest market, accounting for about 60% of business.

''In terms of the H-1B visa, there are limits to what Trump can do. He may be able to change the annual H-1B lottery through executive order, and shift to merit or priority-based system that replaces the random lottery with a salary-based distribution, for instance,'' Patrick Thibodeau, national correspondent at Computerworld, told ET.

Because broader H-1B reforms require changes in the law and actions by Congress, there would likely be a court challenge testing his authority to make such changes, he added.

Analysts say changes to the visa program could shave as much as 300 basis points off the margin at a time when their customers are already clamouring for lower prices and they need to invest in digital offerings. "It will be a headwind to the margin. We will have to accept the higher costs and seek out the improvements and margin levers internally," Milind Kulkarni, chief financial officer at Tech Mahindra, told ET on Monday.

The H-1B visa has allowed Indian IT companies to send Indian engineers to the US, keeping costs low and giving them a margin advantage over the multi-national players. Industry body Nasscom said it does not react to reports of drafts. ''Not only is offshoring of IT and BPO slowing because of lessening demand, but increased political pressures and policies being driven by the Trump leadership are completely changing the game.

When it comes to IT services and BPO, it’s no longer about ''location, location, location'', it’s now all about ''skills, skills, skills'','' said Phil Fersht, CEO at consultancy Horses for Sources in a blog.

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