Will the H-1B Visa Fee Increase Affect Indian IT Firms?
Click to start listening
Synopsis
The recent increase in the H-1B visa application fee to $100,000 is unlikely to significantly impact Indian IT firms, thanks to their reduced dependency on such visas. This report evaluates potential implications and strategic shifts for these companies amid evolving market conditions.
Key Takeaways
- H-1B visa fee increase to $100,000 expected to have limited impact.
- Indian IT firms have reduced reliance on H-1B visas through localization and offshoring.
- Medium-term implications may prompt operational reassessments.
- Growth in Global Capability Centres in India is anticipated.
- Overall corporate earnings outlook is improving.
New Delhi, Sep 23 (NationPress) The anticipated rise in the H-1B visa application fee to $100,000 is projected to have a minimal effect on Indian IT service providers. This is largely due to their decreased dependence on H-1B visas over the last ten years, attributed to enhanced localization and offshoring efforts, according to a report released on Tuesday.
However, the mid-term consequences could be more significant. The increased delivery costs in the United States may establish a higher structural cost base, leading companies to reevaluate their operational strategies and consider mitigation options, as stated in a Franklin Templeton report.
The impact's magnitude may differ based on a firm's exposure in the US, the composition of its onsite workforce, and its dependency on non-local talent.
Historically, challenges associated with visas have arisen more from executive measures than from legislative modifications, with cost pressures having already escalated in previous rounds of visa restrictions. Notably, disruptions on the supply side can be more detrimental in high-growth contexts – a scenario that is currently not applicable.
“As H-1B lotteries and applications usually occur in Q4–Q1, the earliest significant effects are expected to manifest in the FY27 petition cycles. In response, service providers are likely to expedite offshoring, broaden nearshore operations in Canada and Mexico, pursue acquisitions in Europe and APAC for geographic diversification, and invest in automation and AI to boost productivity,” the report highlighted.
These transitions are set to enhance the appeal of Global Capability Centres (GCCs) in India to talent, particularly as onsite opportunities decrease and clients demand improved rate realization and efficiency.
Though India's equity markets may face short-term fluctuations, overall valuations still appear robust compared to historical norms.
Nonetheless, IT sector valuations have adjusted in the past 6-12 months in light of a subdued demand outlook.
The forecast for overall corporate earnings in the Indian markets is brightening, bolstered by a rebound in domestic consumption and a gradual rise in private sector capital investments.
“While global uncertainties – including US tariffs – present short-term hurdles for export-dependent sectors, India’s macroeconomic fundamentals are holding strong,” the report noted.
Looking forward, the possible finalization of a trade agreement with the US by the latter half of 2025, coupled with strengthening domestic demand and enhanced earnings visibility, could serve as positive catalysts for the market in the forthcoming quarters, it added.
Point of View
It's crucial to recognize that while the hike in H-1B visa fees poses challenges, Indian IT firms are well-positioned to navigate these changes. Their strategic shifts toward localization and offshoring reflect a resilient approach to global market dynamics. Overall, the Indian economy remains robust, with promising prospects ahead.
NationPress
23/09/2025
Frequently Asked Questions
What is the new H-1B visa application fee?
The new H-1B visa application fee has been raised to $100,000.
How will this fee increase affect Indian IT firms?
The impact is expected to be minimal due to reduced reliance on H-1B visas, with firms adapting through localization and offshoring.
What changes might Indian IT firms consider in response to the fee hike?
Firms may accelerate offshoring, expand nearshore operations, and invest in automation and AI to enhance productivity.
What are the expectations for the Indian equity markets?
While there may be near-term volatility, overall valuations remain elevated, and corporate earnings outlook is improving.
What macroeconomic factors are relevant to the Indian market?
India's macroeconomic fundamentals are resilient, with a recovery in domestic consumption and potential trade agreements with the US acting as positive catalysts.
