The H-1B visa program has long been a critical pathway for Indian IT professionals to work onsite with U.S. clients. Recent changes, including the introduction of a significant $100,000 annual fee per petition, have raised concerns within the industry and prompted companies to reassess their strategies
Key Impacts on the IT Services Sector
- Increased Operational Costs: The new fee structure substantially raises expenses for firms that rely on sending employees to U.S. projects.
- Reduced Onsite Deployment: Higher costs may lead companies to limit onsite roles and shift more work offshore.
- Margin Pressures: Passing additional costs to clients may not always be feasible, affecting profitability.
- Local Hiring in the U.S.: To offset visa challenges, firms may expand their U.S.-based workforce.
- Acceleration of Remote/Offshore Models: Delivery from India or nearshore centers could see stronger adoption.
- Automation and AI Adoption: Increased focus on technology to reduce dependency on visa-dependent labor.
- Geographic Diversification: Firms are exploring other regions like Latin America, Eastern Europe, and Southeast Asia for delivery centers.
- Employee Uncertainty: H-1B holders face greater risks around renewals, layoffs, and long-term stability.
- Industry Advocacy: Associations like Nasscom are engaging with policymakers to highlight potential challenges and seek exemptions.
Long-Term Outlook
While the immediate effect of these changes is a rise in costs and uncertainty, the long-term outcome may drive structural changes in how Indian IT services operate globally. Companies are expected to strengthen their offshore delivery models, diversify geographically, and leverage automation to stay competitive.
Here’s a breakdown of the recent H-1B visa restrictions/changes and their potential impact on India’s IT services industry — what’s happening, what it means, and what Indian firms might do in response. Let me know if you want more depth in any part.
What are the recent changes / restrictions
- $100,000 Annual Fee on H-1B Visa Applications
- As of 19 September 2025, the U.S. government enacted a proclamation that each H-1B petition must be accompanied by a payment of $100,000/year for entry under the H-1B non-immigrant program, except for certain exemptions (e.g. in engineering and healthcare) under specified conditions.
- This is a huge increase compared to previous fees, which ranged between a few thousand dollars depending on employer size and other factors.
- Proclamation on Restriction of Entry of Certain Nonimmigrant Workers
- The same proclamation includes more broadly restricting H-1B entry unless the petition has that large fee attached.
- The rationale given is that the program has been “deliberately exploited” to displace U.S. workers, suppress wages, etc.
- Wage-based selection / increased scrutiny
- Though not all changes are brand new, over time the U.S. has shifted towards selecting higher wage roles / occupations, increasing scrutiny over “specialty occupations,” etc.
- Reduced dependence by some Indian IT firms on H-1B visas
- Firms like Infosys, HCL etc. have reported reducing the proportion of their onsite workforce under H-1B, shifting strategies. For example, Infosys reduced its onsite mix in the U.S. from ~30% to ~24%.
- Also, approvals for new / initial H-1B petitions by Indian IT companies have dropped: e.g. in FY2023, approved petitions for initial employment from top Indian IT firms fell about 56% from FY2015.
How this affects / might affect Indian IT services
Here are likely and potential impacts — some immediate, some more medium to longer-term.
| Area | Likely Impacts |
|---|---|
| Cost structure | The new $100,000 fee per H-1B is a major cost increase. For firms with many employees on H-1B this raises their expense significantly. Could compress margins or force cost-passes to clients. |
| Onsite deployment / client demand in US | Projects that require personnel on U.S. soil (onsite work) become more expensive or less feasible. Clients might prefer remote/offshore teams instead. Some current or future projects might be renegotiated for remote delivery. |
| Workforce planning and visa risk | Increased uncertainty: firms need to plan for visa delays, higher costs, potential denial risks. Also increased compliance and bureaucratic risk. Indian employees may face stricter eligibility / more hardship in getting or renewing H-1B. |
| Competitive disadvantage vs US/local firms | US firms might respond by hiring domestic talent more aggressively, since foreign talent becomes more costly. This could disadvantage Indian firms or those heavily reliant on H-1B. |
| Acceleration of offshoring / remote delivery | As onsite becomes more costly / risky, there is stronger incentive to shift work back India (or third countries), or to enhance remote work / nearshoring capabilities. This could boost India’s remote/offshore delivery business. |
| Talent / employee churn and visa holder vulnerability | For employees on H-1B, layoffs or switching jobs become riskier (must find new sponsor quickly, etc.). Prolonged green card wait times also add stress. Some may reconsider staying in the US or move to other geographies. |
| Strategic adjustments in Indian IT firms | More investment in local hiring (in the U.S.), greater automation / AI to reduce dependency on human labour, diversifying geographic delivery centers, possibly increasing focus on countries with more favorable visa or cost structures. Also more emphasis on upskilling to meet higher wage / specialty thresholds. Already happening to some extent. |
Risks / Challenges
- Client pushback: Clients may resist cost increases; Indian firms may have less room to pass on the full cost of the fee or risk, so margin pressures are real.
- Uncertainty and policy change: The abrupt nature of some of these changes (e.g. short notice) adds uncertainty. Firms need to hedge, but rapid adaptation has costs.
- Workforce morale & retention: Visa issues often mean uncertainty for employees; risk of losing talent to other countries (Canada, Australia, etc.) or roles where visa risk is lower.
- Regulatory / legal risk: Some of the changes (like extremely high fees) may be challenged in courts; until settled there may be confusion. Also, compliance burdens increase, risk of non-compliance penalties.
Opportunities / Silver Linings
- Firms that are already diversified or have strong remote delivery/offshore models are better positioned.
- Push towards more automation/AI may increase productivity and reduce dependency on labour that requires H-1B.
- Firms that invest in setting up local U.S. employment or hiring U.S. staff may pass visa risk by becoming more “local” suppliers.
- India may benefit in the remote services or global delivery centers becoming more attractive or expanding.
- Alternative destinations / markets may open up for Indian IT — not everything needs to be U.S.-based work.
What Indian IT Firms Might Do / Strategic Responses
Here are possible tactical moves:
- Shift to Remote / Offshore Delivery
Increase remote work, ensure more teams work from India (or other countries) rather than onsite in U.S. - Increase Local Hiring in U.S.
To reduce dependency on foreign-workers subject to H-1B restriction, hire more U.S.-based employees for onsite roles. - Pricing and Contract Adjustment
Incorporate visa / risk cost in pricing; adjust contracts to reflect added costs of H-1B tasks. Possibly renegotiate scopes. - Automation & Upskilling
Use AI or tooling to reduce human-hours needed; focus employee training so that higher wage / specialty thresholds are met, making workers more “premium” and less likely to be affected. - Geographic Diversification
Expand delivery centers in other locations (Latin America, Eastern Europe, Southeast Asia), to serve U.S. clients remotely but close to timezone, or to serve other markets. - Policy Engagement & Diplomacy
Through industry associations (e.g. Nasscom), lobby U.S. government for waivers, clarifications, exceptions; negotiate bilateral arrangements. Also explore how exemptions (healthcare, engineering) might be used.
Overall Outlook
- In the short term, likely disruptions: project cost pressures, uncertainty, possibly fewer new H-1B hires, slower growth for onsite led business.
- In the medium to long term, companies that adapt (remote/offshore, automation, diversifying) may emerge stronger and more resilient, though the industry might shift away from heavy onshore models.
- India’s IT service industry may shrink its reliance on U.S.-onsite H-1B workforce, accelerate other revenue streams (product, consulting, local U.S. staffing), possibly lower margins in some segments but also reduce risk exposure.
- For large, well-diversified IT firms, this likely means operational restructuring, financial hedging, more conservative forecasting; smaller players may be more vulnerable to visa risk.
