Obviously, this move triggered a heated debate, for it has a huge financial impact on Indian tech firms such as TCS, Infosys, HCL, and others. Of course, it equally affects global tech firms, such as Amazon, Google, Microsoft, Meta, etc., which heavily rely on foreign workers for the cost-effective execution of projects. No wonder it rattled the Indian tech community more, for Indians have been the largest recipients of H-1B visas with an over 70% share of total H-1B visas issued in the fiscal 2025. Indian student community enrolled in the US universities will be the worst hit by this move: Having gone to the US by taking huge educational loans with a hope to secure a job in one of the tech firms soon after completion of graduation program, they may no longer be able to find sponsoring companies to get employed once they finish their studies.
This move exerts tremendous pressure on Indian IT companies, which are already struggling with weak revenue growth, by way of increased costs and erosion of profit margins. Over it, the Halting International Relocation of Employment (HIRE) bill, introduced by Senator Bernie Moreno, proposes a 25% tax on payments made by US entities for outsourced work. The bill also proposes to make such payments non-deductible for tax purposes. If this move takes the form of an act, it would drastically alter the cost structure of US companies. This will, in turn, impact the operations of the Indian tech industry, which is currently pegged at around $260 bn, for it derives 50-60% of its total revenue from the US.
Here, it is pertinent to note that our IT firms have been operating to a significant extent on a cost-arbitrage model. With the HIRE bill coming into effect, cost-arbitrage will disappear, making it expensive for clients to avail tech services from India. It means that if the HIRE bill becomes law, it may affect the employment of 40-60% of the 2.5 million IT service workforce. There is, however, a hope that this bill is less likely to turn into an act, for the big tech companies of the US may resist it. Nevertheless, considering the entire narrative surrounding the US tariffs, visa fee hikes, and other factors, IT companies must make a concerted effort to transition from a cost-arbitrage model to a capability-led model to ensure sustainability. This obviously calls for repositioning themselves as innovation hubs or product developers by increasing their R&D investments.
At this juncture, it is necessary to take note of the comments made by the veteran US foreign policy expert Ashley Tellis, who earlier played a crucial role in shaping the US-India nuclear deal. Reacting to the rise in visa fee, he said that the move reflects a deeper strategic shift in how the US and Trump in particular view India now: “In Trump’s view, India is no longer a strategic priority—it has become a ‘problem’ like many others”. He further said, “Trump thinks of the entire world as economic rivals of the US”. He also commented that Trump’s approach to China is less geopolitical and more economic. Against this backdrop, he opines that India’s value as a counterweight to China dissipates.
Intriguingly, warning that the H-1B “program as India once knew is no more”, he drew attention to America’s “growing discomfort with foreigners, especially from the Global South, becoming part of the America of the future.” Observing that the US is moving toward a model of outsourcing talent through employing Indians in Global Capability Centers, he, of course, appreciated India’s muted diplomatic response.
Given this reality, our reaction to the visa fee changes should not be confined to simply mirroring our widespread anxieties; instead, the government and the corporations must focus on the long-term interests of the country. This shall include not only skills development, process reforms, but also the creation of a deep innovation ecosystem in the country, duly supported by adequate capital investment in R&D. We must create a platform that could engage the returning talent more productively. There is no choice—if we have to reduce our dependence on external job markets, we must invest all our resources to become a digital powerhouse.
But we have been slow adapters all along. Nevertheless, in times of uncertainty, leaders, be they from the government or corporate world, as Ranjay Gulati said in his article in the latest HBR, are supposed to be courageous and to size up the complex and ambiguous situations step by step and steer through the crisis, adjusting the course as their understanding improves. The call of the hour is: Leaders have to be simply brave.
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