When US President Donald Trump announced a $100,000 application fee for H‑1B visas in September, it sent shockwaves through the global technology industry.
While the policy applies to all employers hiring skilled foreign workers, its impact is set to be disproportionately severe for India’s IT outsourcing giants, especially Tata Consultancy Services (TCS) and Infosys.
The proposed fee, which would be charged for every new H‑1B worker hired from outside the United States, marks the most aggressive restriction yet on the use of foreign skilled labour.
Industry experts say it directly targets the staffing-heavy business model that has long powered Indian IT firms’ dominance in the US market, reported The Financial Express.
Why Indian IT Firms Are Squarely in the Firing Line
A Bloomberg News analysis highlights that multinational IT services companies acting as intermediaries for US clients face the sharpest fallout. At the top of that list are TCS, Infosys and Cognizant, firms that rely heavily on overseas talent deployed on client projects.
Between May 2020 and May 2024, nearly 90 per cent of new H‑1B hires at these companies were approved at US consulates. This is crucial because every such hire would trigger the new $100,000 fee.
For Infosys, the exposure is particularly stark. More than 93 per cent of its new H‑1B approvals, over 10,400 workers, would have attracted the fee, translating into visa costs of more than $1 billion. TCS would have faced charges for around 6,500 workers, accounting for 82 per cent of its newly approved H‑1B employees. Cognizant would be hit for more than 5,600 workers, or 89 per cent of new hires.
Immigration attorney Jonathan Wasden, who represents several IT employers, said, “We’re already seeing companies pull back. The fear is that if you have truly exceptional talent overseas, those people are definitely going to be missing out.”
Why the H‑1B Programme Is Under Political Fire
The H‑1B visa programme offers 85,000 visas annually to skilled foreign workers with at least a bachelor’s degree. Large IT and technology firms dominate the system, making it a long‑running political flashpoint in Washington.
Both Democrats and Republicans have accused employers of using H‑1B visas as a source of cheaper labour. Companies argue otherwise, pointing out that visa holders must be paid a “prevailing wage” and that entry‑level H‑1B salaries often exceed the US median income.
Yet the data continues to fuel criticism. Bloomberg’s analysis shows that over 40 per cent of new H‑1B hires in the past four years came directly from overseas, not from foreign students already studying in the US.
In 2020, the Trump administration introduced an online lottery system that allowed companies to register workers cheaply and without full documentation. Registrations surged. By fiscal 2024, there were 758,000 eligible registrations competing for just 85,000 visas.
Biden‑era officials later accused IT consultancies of “gaming the system” and tightened the rules. Trump’s proposed $100,000 fee goes much further.
White House spokeswoman Taylor Rogers said the measure would bring certainty to employers and discourage firms “from spamming the system and driving down wages.”
How Companies Are Responding
Legal challenges are already underway, including one led by the US Chamber of Commerce. However, many firms are not waiting for court outcomes.
The IT consulting sector had already reduced new H‑1B hiring since 2024, and the new fee could accelerate that shift, said Steve Hall, Chief AI Officer at Information Services Group. He expects US firms to deepen investments in India instead.
“If you want to access the world’s best talent, you have to go where the talent is,” Hall told Bloomberg.
Infosys, like most major H‑1B employers, declined detailed comment but pointed to earlier remarks by CEO Salil Parekh, who said only a minority of its US workforce requires visa sponsorship and that the company continues to serve clients “without any disruption to their services today and into the future.”
IBM, which hired 88 per cent of its H‑1B workers from abroad, said it has already adjusted its strategy. “Our focus remains on ensuring we have the right skills to meet clients’ evolving needs,” said IBM spokesperson Miki Carver.
Critics of the H‑1B system believe the policy could finally alter how companies hire. “The fee was a step in the right direction, but employers will figure out how to adapt,” said Ron Hira, a political scientist at Howard University. “Will that be a higher‑skill, higher‑wage cohort? That’ll be the first sign.”
Some firms are already planning to skip lottery entries for workers requiring consular processing, according to Finn Reynolds of legal‑tech firm Lawfully.
“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 behaviour vis‑à‑vis the H‑1B lottery,” Reynolds said. Lawfully estimates that next year’s H‑1B lottery entries could fall by 30 per cent to 50 per cent.
