TCS and Infosys can absorb rising tariff costs

Moody's reports that planned US tariffs on imports could impact various sectors in South and Southeast Asia, particularly automotive and chemicals. However, Indian IT firms TCS and Infosys are better positioned to handle rising costs due to strong profitability. While business service providers like TCS and Infosys are not directly affected by tariffs, they may face challenges from stricter US immigration policies. Nearly 75% of H-1B visas issued in 2023 went to Indian nationals, highlighting the industry's reliance on foreign talent. Infosys has seen its stock valuation decline, now trading at a lower multiple than TCS and HCL Technologies. Shares of Infosys have dropped 16.2% this year, prompting Morgan Stanley to downgrade its rating on the company.