India’s top IT services firms are bracing for a steep rise in costs after the US government sharply increased the H-1B visa application fee to $100,000, nearly ten times the earlier $7,500–10,000. According to estimates, leading players could each end up spending an additional $150–550 million in immigration fees based on their past visa sponsorship levels, ET reported.

The US remains the largest market for Indian IT, contributing up to 85% of their revenue and employing 3-5% of the industry’s workforce onsite. For India’s IT giants like TCS, Infosys, HCLTech, and Wipro, the recent hike in US H-1B visa fees could cut their core operating profits (EBITDA) by 7–15%, according to industry analysts.TCS, for example, had about 7,000 H-1B approvals in FY23. If these visas come up for renewal in October 2025, the added cost of roughly $90,000 per petition could reduce EBITDA by 7–8%. As of FY25, TCS had 5,500 employees on H-1B visas.To mitigate the impact, firms are expected to accelerate offshoring and execute more work from India or other low-cost locations. However, for specialised roles requiring onsite presence, they will still need to sponsor visas-now at sharply higher costs. This could push companies toward greater local hiring and subcontracting in the US, though both options are costlier and may erode margins further.Industry executives caution that the move could disrupt project timelines, especially around renewals and workforce mobility. Clients may also feel the pressure, as IT vendors are unlikely to absorb the entire burden and will pass on costs directly or indirectly. “Profitability will be impacted as the overhead costs will go up, but companies will also cut corners in what skills will have to be kept onshore, and if they can make do with fewer people,” Akshat Vaid, partner at US consultancy and research firm Everest Group told ET.Recruitment experts believe the change will accelerate alternative models such as offshore delivery, gig-based work, and remote contracting.“This may stretch the project implementation timelines of clients as people will not be available locally. For individual professionals, there will be disruption, especially around renewals and mobility, but over time both employees and companies will find new ways of working,” Aditya Narayan Mishra, managing director and CEO of recruitment services firm CIEL HR told the outlet.“This will accelerate alternative talent models. With employers reluctant to commit to the heavy cost of sponsorship, we could see greater reliance on remote contracting, offshore delivery, and gig workers,” he added.The impact may not be immediate, as the next round of visa applications will only be filed in 2027. However, with $13 billion worth of deals due for renewal since July, analysts say the uncertainty could weigh on negotiations, renewals, and new project pipelines.While Indian IT vendors are better prepared for localisation, already embedding subcontracting and nearshore delivery into their models, analysts warn the broader $283 billion outsourcing industry faces renewed margin pressure after three years of sluggish growth. Interestingly, experts also point out that Big Tech companies, not just Indian IT firms, account for a large share of fresh H-1B applications, meaning the cost impact will be felt widely across the tech ecosystem.Experts suggest that companies may increasingly rely on offshore teams where possible, reserving onshore roles for critical skills exempt from the new fee order. The move comes amid broader disruption from slowing demand and the growing adoption of AI, forcing software exporters to adapt their delivery models and talent strategies.According to Motilal Oswal, Indian IT firms are relatively well-positioned to adjust because localisation and subcontracting are already integral to their operations. The report also notes that while H-1B visas are often associated with Indian IT, major US tech firms like Google, Amazon, Microsoft, and Meta actually account for a larger share of fresh applications.Overall, the fee increase is expected to pressure margins and client deals, but IT companies are likely to explore new ways to manage costs through offshore delivery, subcontracting, and selective onshore hiring.

EPA

Continued disruption