Will the US H-1B visa fee significantly affect IT companies’ margins?
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Synopsis
A new report suggests the US government's $100,000 fee for H-1B visa petitioners may not drastically impact India's large and mid-cap IT firms. While companies can adapt through local hiring and offshoring, slight profit margin reductions are anticipated as they navigate these new regulations. Discover how this fee affects the tech industry and its workforce.
Key Takeaways
- US mandates a $100,000 fee for H-1B visa petitioners.
- Impact on profits expected to be minimal.
- Large-cap firms may see 7 to 14 basis points reduction.
- Mid-cap firms could face 21 to 39 basis points decline.
- Firms can mitigate impacts through local hiring and offshoring.
New Delhi, Sep 22 (NationPress) A recent report indicates that the US government's mandate, which requires a one-time payment of $100,000 from H-1B visa petitioners, is unlikely to have a major effect on the profit margins of large- and mid-cap IT services firms in India.
This situation can be mitigated through strategies like increased local hiring, subcontracting, or offshoring, according to Equirus, a fund management firm.
Unless extended, this restriction will be valid for 12 months from September 21, 2025, and pertains only to new visa applicants.
Equirus forecasts that the fee could reduce the operating profit margins of large-cap IT companies by merely 7 to 14 basis points if it applies exclusively to new H-1Bs. If it encompasses both new and existing visa holders outside the US, the decline could reach 26 to 49 basis points.
Mid-cap firms might see a range of impacts from 21 to 39 basis points for new applications and 60 to 109 basis points if it applies to both new and existing visa holders.
According to analysts, Indian IT vendors have progressively diminished their on-site H-1B workforce over the past six to eight years. H-1B visas account for roughly 25-35 percent of the large-cap workforce and 30-60 percent for many others.
The $100,000 fee often exceeds the salaries of H-1B visa holders employed by numerous Indian IT companies.
Equirus emphasized that common sense will guide firms to replace affected applicants through the incremental hiring of locals, green card holders, or subcontractors while engaging in offshoring.
Nevertheless, the report also highlighted that sales growth may experience a slight deceleration in the latter half of fiscal 2026, as the necessary adjustments require careful planning and client approvals.
Approximately 71 percent of H-1B visa holders originate from India, predominantly working for tech giants such as Infosys, Wipro, Cognizant, and Tata Consultancy Services.
Point of View
It's clear that while the recent US visa regulations pose challenges, Indian IT firms are well-equipped to adapt. This situation underlines the importance of flexibility in hiring practices and the ongoing evolution of the global tech landscape. With 71% of H-1B visa holders coming from India, the ripple effects will be felt, but innovation will prevail.
NationPress
22/09/2025
Frequently Asked Questions
What is the new fee for H-1B visa petitioners?
The US government has mandated a one-time fee of $100,000 for H-1B visa petitioners.
How will this fee impact Indian IT firms?
The fee is expected to lower profit margins by only 7 to 14 basis points for large-cap IT companies and 21 to 39 basis points for mid-cap firms.
What strategies can IT firms employ to cope with these changes?
IT firms can adapt by increasing local hiring, subcontracting, or offshoring to mitigate the impact of the new fee.
How long will these restrictions be in place?
The restrictions will remain effective for 12 months from September 21, 2025, unless renewed.
What percentage of H-1B visa holders are from India?
Approximately 71% of H-1B visa holders are from India, primarily working in technology firms.
