US President Donald Trump’s crackdown on immigration and H-1B visas will hit Indian IT firms, particularly Tata Consultancy Services (TCS) and Infosys, analysis suggests. According to a Bloomberg News study, the impact would be particularly significant for international staffing organisations serving as intermediaries for companies seeking H-1B talent, including firms like Tata Consultancy Services Ltd., Infosys Ltd., and Cognizant Technology Solutions Corp.The proposed $100,000 fee for fresh H-1B workers recruited from abroad by President Donald Trump could severely impact IT outsourcing and staffing sectors. This substantial levy represents the most stringent limitation yet imposed by the Trump administration on skilled foreign worker employment.
The H-1B programme, which serves as the main entry point for foreign professionals holding at least a bachelor’s degree into US employment, has traditionally been utilised extensively by major technology and IT organisations. These firms secure the majority of the 85,000 available visa positions annually.Legislators from both major political parties have suggested that organisations utilise the programme to avoid hiring American workers at higher costs, although H-1B regulations require employers to pay industry-standard wages, and entry-level H-1B professionals typically receive compensation above the US median salary.Analysis of data by Bloomberg News reveals that international applicants from abroad, rather than recent international university graduates already present in the US, represented over 40% of new H-1B approvals during the previous four-year period.
Why TCS, Infosys Bear Brunt of H-1B Fee Hike
For TCS, Infosys and Cognizant, approximately 90% of their new H-1B appointments between May 2020 and May 2024 received approval at US consulates. Had this fee been in place, each organisation would have incurred additional expenses in the hundreds of millions.The Bloomberg analysis indicates that Infosys would have needed to pay the $100,000 fee for over 10,400 workers, which is more than 93% of their new H-1B appointments during this period, potentially resulting in visa charges exceeding one billion dollars.TCS would have been required to pay this fee for 6,500 workers, affecting 82% of their newly approved H-1B staff, whilst Cognizant would have faced charges for more than 5,600 employees, comprising 89% of their new H-1B recruits.
H-1B visa burden
What’s the future on H-1B visas?
Despite potential legal interventions to stop the H-1B fee implementation, sector analysts expect a significant reduction in visa applications and increased overseas staff deployment.“We’re already seeing that happen,” said immigration attorney Jonathan Wasden, who represents many IT employers. “The fear is that if you have truly exceptional talent overseas, those people are definitely going to be missing out,” he told Bloomberg.Several organisations indicate that the immediate impact of the fee on their activities will be minimal.“The recently announced Proclamation is expected to have limited near-term impact on Cognizant’s operations,” said Cognizant spokesman Jeff DeMarrais. “Over the past several years, we have significantly reduced our reliance on visas, using them only for select technology roles that supplement our US workforce.”IT companies took advantage of the online lottery system established in 2020, enabling H-1B worker registration with minimal fees and simplified petitions. The registration numbers increased significantly, reaching 758,000 eligible submissions for fiscal 2024.The Biden administration’s DHS officials identified IT consultancies’ manipulation of the system, leading to lottery modifications. The newly implemented $100,000 fee serves as a stringent measure to restrict these companies’ programme participation.Taylor Rogers, White House spokesperson, stated it would provide greater certainty to American companies seeking skilled workers whilst preventing organisations from “spamming the system and driving down wages.”The US Chamber of Commerce and various states have mounted separate legal challenges to the fee implementation. A forthcoming hearing will address the motion to suspend the fee or determine its validity.Companies are revising their recruitment strategies without awaiting legal outcomes. The IT consultancy sector has reduced new H-1B applications since 2024, and the fee increase will result in additional offshore recruitment, according to Steve Hall, chief AI officer at Information Services Group Inc.He anticipates increased corporate investment in India, the primary source of H-1B workers, over the next five years, stating, “If you want to access the world’s best talent, you have to go where the talent is.”Infosys referenced CEO Salil Parekh’s October statement, noting limited sponsorship requirements for US staff. Parekh assured continued client service delivery “without any disruption to their services today and into the future.”IBM Corp., which recruited 88% of its H-1B workers internationally, has modified its skilled immigration approach, according to spokesperson Miki Carver, who stated, “Our focus remains on ensuring we have the right skills to meet clients’ evolving needs.”The increased fee represents a positive development, although employers will discover ways to adjust, according to Ron Hira, a Howard University political scientist who has criticised the H-1B programme. He indicated that the visa lottery in April will serve as an initial indicator of the measure’s effectiveness.“Will that be a higher skill, higher wage cohort? That’ll be the first sign,” Hira said.According to Finn Reynolds, director of market research at legal technology startup Lawfully, major H-1B employers intend to avoid registering workers requiring consular visa processing in the lottery. He noted this recruitment adjustment would likely spread across industries until there is clarity regarding the $100,000 fee.Lawfully forecasts that these additional expenses, alongside Trump’s proposed lottery modifications, could reduce next year’s lottery entries by 30% to 50%. Reynolds explained that organisations must evaluate both the fee expenses and candidates’ chances under the revised selection process.“The Trump administration’s $100,000 fee, combined with the weighted-lottery rule, has created an entirely new set of incentives that will reshape market behavior vis-a-vis the H-1B lottery,” he said.
