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The U.S. government's decision to impose a USD 100,000 fee on new H-1B visa applications is set to change the way Indian IT firms operate. With India making up the majority of H-1B approvals last year, the rule could limit cross-border staff movement, delay contracts, and increase project costs. While existing visa holders and renewals are not affected, the sudden announcement created confusion and forced many employees to alter travel plans. Industry experts expect more offshore work delivery, selective visa sponsorships, and a faster expansion of global capability centres in India and nearby regions.
India's information technology industry, valued at about USD 283 billion, is preparing for major changes after the U.S. government announced a USD 100,000 fee on new H-1B visa applications. The announcement, made earlier this week, has unsettled Indian IT firms that depend on the U.S. market for nearly 57% of their revenue. Industry experts, lawyers, and analysts say the fee is prohibitively high and will force companies to rethink their operations. Advertisement
The H-1B program has been central to India's IT services model, with firms rotating skilled workers to U.S. projects. Last year, India accounted for 71% of all approved H-1B beneficiaries, while China was a distant second at 11.7%. With the new rule, companies working with clients such as Apple, JPMorgan Chase, Walmart, Microsoft, Meta, and Google are expected to cut back on onshore rotations, focus more on offshore delivery, and increase hiring of U.S. citizens and green card holders.
Before the White House clarified that the order would apply only to new visa applicants and not to existing visa holders or renewals, several companies including Tata Consultancy Services, Microsoft, JPMorgan, Eli Lilly, and Amazon advised employees on H-1B visas to remain in the U.S. or return quickly. This caused many Indian and Chinese workers to cancel travel and rush back. Immigration lawyers reported a surge of queries from affected professionals, while many expect legal challenges to be filed soon.
Industry body Nasscom noted that the decision could create ripple effects on America's innovation ecosystem and disrupt continuity of projects already underway. Economists also cautioned that the higher cost of staffing may pressure margins, delay deal conversions, and alter project timelines. Analysts added that some contracts may be renegotiated or scaled differently to minimize the need for onshore employees.
Market reactions have been swift. IT company shares, including those of Infosys, Wipro, Tech Mahindra, HCLTech, and TCS, fell between 2% and 6% in early trading sessions this week. Political leaders in India also expressed concern, with some calling the move a serious setback for Indian professionals abroad. The government has highlighted both humanitarian and economic implications, particularly for families of visa holders.
The development comes as the sector is already waiting for clarity on a proposed 25% tax on outsourcing payments and facing slower revenue growth in the U.S. due to reduced discretionary spending by clients. Together, these factors could bring further strain to an industry already navigating global trade and tariff uncertainties.
Looking ahead, experts expect U.S. firms to expand their global capability centres (GCCs). These centres, which have grown from back-office units into hubs for innovation and research, are expected to see more investment in India, Canada, Mexico, and Latin America. India, which already hosts more than half of the world's GCCs, is projected to have over 2,200 such centres by 2030, employing nearly 2.8 million people. Analysts believe this trend will gain further momentum as companies look to balance costs, capabilities, and talent needs.
Source Reuters
5th Jun, 2025
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