H-1B visa fee hike: The middle-class dream of an NRI future in America is again under siege. The Trump administration’s decision to impose a one-time $100,000 fee on new H-1B visa applications has jolted India’s IT services sector to the core. This is not just another regulatory shift—this is a challenge to the foundational assumptions of how Indian IT has served the US market. The fee, announced via executive order, will apply only to new applications (not existing visa holders), and is admittedly a policy escalation rather than a change in principle. Yet the implications are vast.
The Indian IT sector’s scale makes this move especially painful. In fiscal 2025, the industry is expected to reach $282.6 billion (a growth of 5.1 percent), with software exports alone projected at $224.4 billion. More than half of these revenues come from clients in the US. The immediate market reaction was swift: Indian IT stocks plunged, with the Nifty IT index dropping 3 percent, and giants like TCS, Infosys, Wipro and HCLTech bearing the brunt. The rupee, already under pressure, nudged toward a new low.
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JPMorgan analysts estimate the fee could reduce H-m1B approvals by about 5,500 per month, tightening the pipeline of new skilled labour for US tech firms. Given all this, Indian IT must brace for a long, slow grind rather than a sudden collapse.
Threat to margins, re‐ordering of deployment
Where once an IT firm would budget $2,000–5,000 per visa, it now must internalise a $100,000 burden. That is a fifty- to hundredfold jump. The cost shock is not merely financial—it transforms the calculus of who crosses borders and why. For projects deemed non-strategic or routine, firms will now think twice before sending teams onsite. Only missions that genuinely require face-to-face deployment might survive the new threshold.
Smaller and mid-tier players—LTTS, Persistent, Coforge, KPIT, Hexaware, Mphasis—are most exposed. Their margins are thinner, their client bargaining power weaker. Industry observers estimate they could suffer a margin hit of 200–400 basis points unless they subcontract heavily or shift to remote delivery.
Even in the face of this shock, the pivot was already underway. Indian IT firms have gradually reduced dependency on H-1B deputations over the past decade. According to Xpheno, applications from Indian IT majors fell from 35,000 in 2015 to 7,000 in 2025—a decline of nearly 80 percent. Motilal Oswal estimates that in Tier-I firms today, only 3–5 percent of the active workforce are H-1B holders. The fee accelerates the structural shift that was already underway: automation, platform-led delivery, outcome-centric models, increased use of AI and generative systems.
Large firms like TCS and Infosys enjoy resilience. Their US footprint—delivery centres, campuses, hiring pipelines—are already embedded. Their advantage is twofold: scale, and first-mover advantage in recalibrating operations during earlier visa crackdowns. Infosys’ Indiana corporate university and TCS’ regional hubs are now integral to their operating models.
Smaller firms, constrained by scale and capital, must respond by contracting local partners or by delivering more work from India and other offshore locations.
H-1B visa fee hike: Turning risk into opportunity
If the fee hurts, it may also accelerate a classic pivot: bringing work offshore rather than sending people onsite. Global Capability Centres (GCCs) in India, long present as internal delivery arms of multinationals, could become the growth engines. They already contribute over $60 billion (or so) to exports, and have become deeper and more ambitious hubs—stretching beyond back-office tasks toward R&D, AI labs, cloud operations.
A rough estimate: if even a modest fraction of H-1B-dependent work is repatriated to India, GCC expansion could see another leg of growth. Analysts argue this could help India capture offshored work not only from the US, but from Canada, the U.K., Europe, and Latin America—jurisdictions reassessing the cost of onshore staff.
This shift plays to India’s strengths: a deep engineering talent pool, language fluency, time-zone adjacency, domain depth, and mature infrastructure. In effect, US policy might inadvertently reinforce India as a global IT backbone. The offshore model becomes not just a fallback, but perhaps the dominant one.
Strategic diversification and diplomatic imperative
The current shock underlines one long-known vulnerability: over-reliance on the US market. While the US will likely remain the largest client, its volatility demands diversification. Opportunities beckon in Europe’s digital transformation push, Asia-Pacific’s expanding technology adoption, and the Middle East’s sovereign-tech ambitions. Indian IT must stake new claims in these markets. But diversification is not only business strategy—it must be diplomatic strategy. India must engage Washington rigorously. The fee is partial, not permanent. The negotiation should aim for phased rollbacks, carve-outs for critical sectors (deep tech, semiconductors, fintech), and safeguards that preserve cross-border technology collaboration.
There is also a rhetorical imperative: policymakers should highlight how foreign-talent inflows have underpinned US technology leadership, innovation pipelines, and global outreach. Already, technology CEOs such as Satya Nadella, Sundar Pichai, Elon Musk, among others, have publicly defended the H-1B regime as central to American competitiveness.
Risks, fragilities, and forward trajectories
The one-time visa fee is not the only headwind. The US is also considering an outsourcing tax or “reshoring tax” on foreign firms with large external dependencies—a proposal that, if enacted, could further raise the cost of servicing US clients. Beyond that, the US may abandon the random lottery system for H-1B allocations, introducing a weighted selection based on wages and skills—thereby prioritising more advanced, better-paid applicants.
Domestically, India’s IT earnings had already shown signs of strain. Analysts expect a muted performance in fiscal 2026 as US client spending slows and discretionary tech budgets tighten. Finally, macro vulnerabilities loom. India is concurrently under export pressure from US tariff escalation, particularly in goods, which may spill over into sentiment and capital flows.
Trump’s new H-1B fee is disruptive, but not fatal—for India’s IT sector. The trajectory had already shifted away from visa-heavy models toward offshore delivery, automation, and platformised services. What the US intended as a deterrent may instead accelerate India’s reinvention. The power to adapt, not preserve the old model, will decide winners. India’s IT leadership must now double down on global diversification, innovation-led offerings, and diplomatic engagement. The era of living by visas is ending; the era of shaping global tech through ideas, infrastructure and scale must take over.