How bad will the impact of H1-B visa fee hike be on tech companies?
The H-1B visa application fee hike can dampen hiring by US Big Tech and startups, but not have significant impact on Indian IT companies
Last Updated: Oct 13, 2025, 18:01 IST4 min
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The dollar dreams of Indian workers have dulled with the recent hike in H-1B visa fee. A proclamation by US President Donald Trump, which came into effect at 12:01 am (EDT) on September 21, levied a one-time fee of $100,000 on new H-1B visa applications from the previous fee of $1,000.
The move is one of the many announcements made by the US as part of its protectionist measures. Employers who sponsor H-1B visas to hire skilled workers will need documentation of the payment prior to filing petitions on behalf of the workers. While the announcement has caused some confusion, clarifications have indicated that the fee will be applicable only on the new H-1B visa lottery cycle, which will play out in FY27.
Indian IT companies will likely see an impact of nearly 6 percent EPS in the new financial year, according to multiple brokerage reports. Industry body NASSCOM said that the change will have marginal impact on Indian and India-centric companies, as they have been reducing their dependence on H-1B visas.
The greatest impact will be on hires by US-based Big Tech companies such as Amazon, Google, Microsoft, Meta and Apple, which have steadily increased their share of H-1B hires over the years for specialised fields such as engineering, research and development. Amazon Services LLC topped the list of H-1B visa approvals in the first half of 2025, with 10,044 approvals till June 30, 2025, as per data sourced from the US Citizenship and Immigration Services (USCIS).
Impact on Indian IT
Indian IT companies have reported a gradual reduction in the number of workers they deploy at client locations for compliance reasons. Workers on H-1B visas comprise between 1 percent and 5 percent of the total workforce at Indian companies, according to estimates by brokerage firm ICICI Securities.
The top Indian IT companies have reduced the number of employees in the US on H-1B visas through localised hiring. According to brokerage firm Motilal Oswal, nearly 20 percent employees of Indian IT vendors are currently based on-site, of which only about 30 percent are on H-1B visas. This translates to hardly 5 percent of active employees working on H-1B visas.
The number of new applications is expected to go down significantly in the coming years, along with career trajectories and incentives in the form of US-based roles. “With the new cost burden, companies will rethink sponsorships, reserving them only for exceptionally senior or niche roles. For most IIM alumni, the well-trodden path of joining McKinsey, Amazon, or Goldman in India and transitioning to America within three years is likely to close,” says Anirban Ghatak, economist and assistant professor at IIM Kozhikode. “Instead, Canada, the UK, Singapore, and the Middle East will absorb this diverted talent. The broader effect is a stickier talent pool in India, with global firms leaning more on offshore teams here. For IIM grads, the American dream becomes sharply cost-filtered, turning a once-plausible career step into a rare exception”
Indians continue to be the largest segment of applicants for H-1B visas, constituting nearly 71 percent of the total approved visas in 2024; of the total approvals, nearly two-thirds were for “computer-related” work, according to the USCIS.
“The steep increase in H-1B visa fee will make sponsorship economically unviable for most, especially startups. Even large tech companies may limit expat hiring for critical or highly specialised roles and only where local hiring is not feasible,” says Pooja Ramchandani, partner at legal firm Shardul Amarchand Mangaldas. She adds that businesses and their immigration lawyers will need to think of strategies for risk management, litigation, alternative mobility planning, compliance and restructuring of workforce models. Mid-cap IT companies from India and startups are likely to slow down hiring from India as the impact on visa application costs as percentage of revenue will work out to be significant.
The workaround
The increase in H-1B application fees will encourage offshoring of services and drive up local hiring. Further, the provision for clearance by US Homeland Security for non-immigrant work visas for the US for critical functions could offer a workaround for highly skilled professionals.
“Bilateral partnerships in tech and health care, corporate-sponsored visa programmes, and structured talent channels can create predictable pathways for high-demand professionals,” says Avinav Nigam, founder and CEO at global talent AI-recruitment platform TERN Group. “Indian IT and health care hubs, along with global capability centers [GCCs], already allow US firms to access Indian talent without relying solely on visas. Similarly, sector-specific initiatives or R&D incentives could support the mobility of skilled professionals.”
Skilled Indian professionals can also explore opportunities in other geographies such as the UAE, Germany and the UK via strategic visas. Employees with highly specialised skill sets can consider alternative visa categories, other than the H-1B.
“Some candidates may explore alternative categories such as L-1 for intra-company transfers, O-1 for extraordinary ability, or may look to extend time under OPT or STEM OPT. The challenge is that these pathways are narrow and eligibility heavy, so they help at the margins but do not substitute for the main H-1B route for most Indian candidates,” says Mohak Nahta, founder and CEO of Atlys, which streamlines travel visa processes for individuals.
While the impact of the new fee rates will be felt over the next few years, the proclamation itself stands a chance of being challenged in US courts and leaves room for negotiations in the long term. To sum it up, the long-term impact is likely to be mild, though in the mid-term it will redirect the course of skilled immigration from India.
First Published: Oct 13, 2025, 18:01
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