Trump’s H-1B policy revisions serious setback to Indian IT

Rising costs, fewer visas push firms toward selective US deployments

Repeated changes in the policy of the Trump administration in the United States like fewer visas and a steep hike in visa fees have come as major setback to the Indian Information Technology industry and forced companies to cut onsite deployments, prioritise high-value roles, shift projects offshore, and reassess manpower strategies amid tightening profit margins.

The announcement by the United States administration on October 2, to impose a new, one time H-1B visa filing fee of USD 100,000 for large tech employers per petition, depending upon the size of the hiring company, has sent ripples across India’s USD 250-billion IT industry.

The new fee, framed under the US Workforce Protection Fee, significantly increases the cost for hiring foreign skilled workers which previously ranged between USD 2,000-5,000 and hence represent as much as 50-fold increase in costs, placing significant additional pressure on Indian IT majors that collectively account for over 70 pc of all H-1B visa approvals annually.

According to data from the US Citizenship and Immigration Services (USCIS), Indian nationals received over 70 pc of all approved H-1B visas in FY2024, with firms like TCS, Infosys, Wipro, and HCL Technologies leading the list. With many Indian IT firms deploying tens of thousands of professionals on onsite projects in the US, the impact of this cost escalation is expected to be significant.

Industry analysts suggest that the new fee structure could cost top Indian IT firms an additional USD 80–100 million collectively in annual operational expenses, tightening their profit margins in a market already facing wage inflation and slower digital demand growth.

“The hike in H-1B visa fees will push Indian IT companies to rethink how they place their people in the US. With increased visa costs, profit margins will squeeze, prompting firms to reassess if the onsite role truly makes business sense,” Afaq Hussain, Director at the Bureau of Research on Industry and Economic Fundamentals (BRIEF), a public policy research and consulting organisation, tells Media India Group.

“What is likely to happen is a more careful and selective approach. Companies will prioritise their H-1B applications on highly skilled professionals whose billing rates can justify the visa fee. For many others, work that was once done onsite may shift to offshore teams in India,” he adds.

While large IT giants have room to absorb the higher costs, small and mid-sized firms are expected to face sharper challenges. Many of them operate on tighter billing margins and depend more heavily on H-1B placements for client-facing roles in the US.

“The impact of this fee hike will be more on smaller firms and startups as their business is limited and negotiating powers are also lower. Every onsite placement will now be evaluated more carefully, with a strong focus on financial viability and project value,” says Hussain.

As a result, the number of H-1B visa applications from Indian companies is likely to decline, as firms become more selective about which roles justify the additional costs.

Global delivery heads across major Indian firms are already reworking manpower deployment models. Naveen Kumar, a mid-level project manager at a New Delhi-based IT services firm, said the recalibration has begun internally.

“Our team was supposed to send five engineers to Austin in Texas for a US client project next quarter. Now it has been reduced to two. The rest will support remotely from Bengaluru. The client is adjusting to hybrid collaboration models, and that is becoming the new normal,” Kumar tells Media India Group.

The policy has indirectly affected how the company handles its US projects. With fewer employees onsite, the company relies more on remote collaboration and offshore delivery models. “This change might reduce project flexibility, but it also encourages better use of automation and digital tools for managing large-scale client operations efficiently,” he adds.

This trend aligns with what industry reports have predicted, a ramp-up of offshore centres in India’s Tier-II cities, such as Kochi, Indore and Bhubaneswar, to manage cost efficiency and resource flexibility. Simultaneously, local hiring in the US is expected to gain momentum for mid-level roles that can be effectively staffed by domestic talent.

“Local hiring in the US may gain momentum, especially for roles that can be effectively handled by domestic talent. However, for highly specialised and niche functions, where Indian professionals bring unique expertise, firms will likely continue to rely on their seasoned Indian workforce, even with the higher costs,” says Hussain.

In the short term, companies may also explore temporary alternatives to balance travel and project requirements. Business visas, which can allow short-term stays of up to six months per visit with a validity of as much as ten years, may serve as a bridge for managerial and consulting roles that require short onsite stints rather than long-term presence.

“There may be a short-term dip as the already negotiated projects absorb the new cost hike and operational models are fine-tuned. For upcoming projects still in negotiation, companies will naturally factor in the new visa fee structure and adjust their pricing and manpower plans accordingly,” Hussain adds.

However, the economist also underscored that Indian IT firms’ deep expertise, established client trust, and offshore delivery strength mean that the change will not derail their global competitiveness.

For Indian IT, a sector that built its global dominance on the seamless movement of talent, the US fee hike marks another chapter in adapting to shifting regulatory and cost landscapes.