What's Happening?
President Trump has imposed a $100,000 fee for new H-1B visas, prompting the Indian IT industry to overhaul its strategy of rotating skilled talent into U.S. projects. The sector, which earns about 57% of its revenue from the U.S. market, has been a major beneficiary of H-1B visas, with India accounting for 71% of approved beneficiaries last year. The fee increase is expected to disrupt the industry's onsite-offshore model, affecting margins and supply chains. Companies like Tata Consultancy Services and Amazon have advised employees on H-1B visas to return to the U.S. or stay put, causing many workers from India and China to rush back.
Why It's Important?
The fee increase could have significant implications for America's innovation ecosystem and business continuity for onshore projects. It may lead to a reduction in access to the H-1B program for skilled foreign nationals, reshaping employer demand. The move is expected to constrain client-facing roles, hurt IT deal conversion, and extend the time taken to scale up tech projects. It could also accelerate the growth of global capability centers, which support operations, finance, research, and development.
What's Next?
Legal challenges to President Trump's move are anticipated, with several lawsuits expected to be filed soon. The Indian IT sector is awaiting clarity on a proposed 25% tax on outsourcing payments and is facing weak revenue growth in its mainstay U.S. market. Industry watchers expect the move to propel the growth of global capability centers in India and other regions, potentially leading to more local hiring in the U.S. and increased pressure to deliver automation and AI.
Beyond the Headlines
The fee increase is part of a broader shift in services economics, reflecting ongoing global trade and tech tensions. It could lead to a new world order in services economics, affecting how companies manage their global operations and talent. The development highlights the challenges faced by the Indian IT industry in adapting to changing U.S. immigration policies.
