New US Bill Could Hurt India's IT Industry By Targeting Outsourcing, Says GTRI

A new US bill aimed at outsourcing could seriously impact India’s $280-billion IT, BPO, and Global Capability Centre (GCC) sector, which gets over 60 percent of its revenue from the US, according to the Global Trade Research Initiative (GTRI).

GTRI’s analysis says the ‘Halting International Relocation of Employment (HIRE) Act’, introduced in the US Senate on September 5, 2025, proposes heavy penalties for companies that send work overseas. The bill, which is different from the 2010 HIRE Act, would add a 25 percent excise tax on payments US companies make to foreign service providers, even for work done completely outside the US. It would also stop these payments from being tax-deductible.

GTRI says a 25 percent tax plus losing deductibility could

make outsourcing much more expensive for US companies, leading some to renegotiate contracts, shift work to US or nearby locations, or slow down new outsourcing. If these rules start from January 1, 2026, outsourcing costs for US companies would go up, possibly forcing them to hire more locally, renegotiate deals, or reduce new outsourcing. High-volume jobs like application maintenance, back-office work, and customer support could be affected the most. Even in-house GCCs of US multinationals in India might not be safe, since the tax applies to any payment that benefits US consumers.

Indian tech firms may need to hire more in the US, accept lower profits, or focus more on digital, AI, cybersecurity, and consulting services. Uncertainty about the law could also impact new GCC investments in India. GTRI pointed out that high-volume jobs like application maintenance, customer support, and back-office processing are especially at risk.

Even GCCs that serve US parent companies may not be protected, since the tax applies to any payment that benefits US consumers, including internal cost allocations. The bill, introduced by Senator Bernie Moreno (R-Ohio), is still in the early stages, with no committee hearings or co-sponsors yet. Its future is uncertain, as US tech and service companies are likely to oppose measures that raise their costs. Still, GTRI warned that the proposal shows growing political resistance in Washington to offshoring. The report said India’s IT sector should closely watch the bill and get ready for possible changes in US outsourcing policy.