Trump’s H-1B fee hike rattles Indian IT firms, legal fight looms

By: Team India Tracker

The Indian IT services sector, which depends heavily on H-1B visas to serve US clients, faces a direct blow from the fee hike. TCS, Infosys, Wipro, and HCL deploy thousands of engineers and project managers to the US.

The Trump administration’s decision to raise H-1B visa fees is sending shockwaves through the global technology sector, with Indian IT services firms likely to feel the sharpest impact. The fee increase comes amid mounting scrutiny of foreign labour in the US, raising operating costs for companies that rely heavily on deploying skilled engineers across borders.

Indians account for 71 per cent of all approved H-1B visa applications in recent years, according to US Citizenship and Immigration Services, with China the next largest group. As the technology sector braces for possible disruption, immigration lawyers and industry groups plan to challenge the executive order this weekend.

Under the new rules, taking effect at 12:01 am eastern time on September 21, even professionals with a valid H-1B visa could be required to pay a $100,000 fee to enter the US if they are currently outside the country.

India’s top information technology (IT) services companies are cutting their dependence on H-1B visas for deploying staff in the US, even as Washington sharply raised visa fees this month. Donald Trump increased the H-1B visa fee to $100,000 on September 20, a move expected to raise costs for foreign outsourcing firms. The programme allows US companies to hire skilled foreign workers, particularly in science, technology, engineering and mathematics.

Tata Consultancy Services (TCS), Infosys, HCLTech, Wipro and Tech Mahindra now rely on H-1B visas for between 20 per cent and less than 50 per cent of their US workforce, company data show. Approved H-1B petitions for the top seven Indian IT firms fell 56 per cent between FY15 and FY23, to about 6,700, according to government data. To offset the decline, Indian companies have stepped up local hiring and expanded US-based delivery centres.

Infosys and TCS now employ more than half their US staff locally, reducing their reliance on temporary work visas. Firms are also leaning on subcontractors and increasing offshore delivery of projects. More significantly, the shift reflects both tighter US immigration policies and the industry’s own efforts to localise operations in its largest market. America accounts for more than half of revenue for India’s $245 billion IT services sector.

The H-1B programme allows US employers to hire 65,000 temporary foreign workers each year, with an additional 20,000 visas reserved for advanced degree holders. These permits are typically valid for three to six years, and most costs are borne by the sponsoring companies.

Big Tech Tightens Travel

The fee hike immediately triggered a response from US tech behemoths. Microsoft, JPMorgan, and Amazon instructed employees holding H-1B visas to remain in the country, while those working abroad were asked to return before midnight on Saturday (0400 GMT Sunday), when the new fees took effect, according to Reuters.

Since taking office in January, Trump has pursued a broad crackdown on immigration. The H-1B overhaul represents his most high-profile effort yet to reshape temporary work visas and tighten access to the American job market.

IT Firms Face Rising Costs

The IT services industry, which relies heavily on H-1B workers to serve US clients, the fee increase is a direct hit. Companies like TCS, Infosys, Wipro, and HCL Technologies have long used the visa route to deploy thousands of software engineers and project managers onsite in the US.

Margins, already under pressure from slowing global demand and rising wage bills, will come under further strain as visa-related costs mount. Analysts estimate that higher fees could run into hundreds of millions of dollars annually for large Indian outsourcing firms, forcing them to reassess staffing models.

Pressure on the US-India Tech Corridor

The visa changes also risk straining the US-India technology partnership, which has grown into a cornerstone of trade relations. India remains the largest user of H-1B visas, accounting for nearly three-quarters of approvals in recent years.

While Trump’s move may play well domestically, it adds uncertainty for Indian IT exporters that count the US as their biggest market, contributing more than 60 per cent of sector revenue.

Outlook

The immediate fallout of Trump’s order will be higher costs and greater uncertainty for Indian IT companies that depend on the US market. Longer term, the sector may adapt by hiring more Americans, investing in automation, and diversifying client bases.

But for now, Trump’s executive order underscores the risks Indian IT exporters face from political shifts in Washington. As one industry executive put it, “When the rules of the game change in the US, India’s IT industry feels it first.”