The recent announcement by former U.S. President Donald Trump to drastically increase H-1B visa fees to an astounding $100,000 per year has sent shockwaves through the tech world. For a Bengaluru-native tech couple living in California, this news felt like a direct hit. They, like many others, are grappling with the daunting question: will their employers cover such a massive annual expense, or will they be forced to shoulder it themselves? “We’ve been living with a cloud of uncertainty since January,” expressed the female techie, preferring to remain anonymous. “It’s a feeling of no longer truly belonging in America.”
A Deep Impact on Karnataka’s Tech Talent
This sentiment of anxiety is widespread among the estimated 300,000 Indian tech professionals currently working in the U.S. on H-1B visas. Notably, Karnataka, India’s leading tech hub, alone accounts for approximately 125,000 of these skilled individuals working on-site in American companies.
According to Avinash Vashistha, Chairman and CEO of Tholons, a prominent GCC Consulting and IT Services firm, this substantial H-1B visa fee hike represents a pivotal policy shift. He emphasized that it will inevitably compel both U.S. and Indian companies to fundamentally rethink their talent management strategies on a global scale.
The new fee structure renders it financially impractical for companies to continue employing high-skilled Indian talent in the U.S. This remains true even though Indian nationals constitute a significant 78% of the highest-earning H-1B visa holders, with some reportedly making over $1 million annually.
Mr. Vashistha further highlighted that for 60% of H-1B visa holders who earn less than $100,000 per year, the new visa fee will either match or surpass their entire annual salary, rendering their continued employment in the U.S. financially impossible.
Some Indian H-1B visa holders have reported that their employers in India have advised them to halt work until further clarification on the new policy emerges. This situation is widely expected to accelerate the trend of “reshoring” tech jobs back to India.
B.S. Murthy, CEO of Leadership Capital, described this development as a “global reset,” predicting its impact would extend even to American students pursuing Master’s degrees in the U.S. Industry veteran and angel investor Ram Prasad Moudgalya suggested that Trump’s policy could inadvertently fast-track AI adoption as companies struggle with a potential talent shortage. He notably added, “For India, this is a prime opportunity for a reverse brain drain.”
The Rise of Global Capability Centers (GCCs)
Mr. Vashistha further elaborated that this situation is likely to prompt a strategic pivot for American corporations. Historically major beneficiaries of the H-1B visa, U.S. tech giants like Amazon and Microsoft are now expected to significantly expand their Global Capability Centers (GCCs) and R&D operations within India. For India, this translates into a valuable influx of high-skilled employment opportunities and a boost to its innovation ecosystem.
Kamal Karanth, Co-founder of Xpheno, stated that the proposed H-1B visa fee increase was not unexpected, with IT services firms having already been bracing for such policy changes. Over the past six months, many companies have proactively appointed or hired new heads for their GCCs, aiming to leverage this model for sustained business growth.
Karanth predicted that while elevated visa costs might decelerate on-site hiring, they would simultaneously intensify the offshoring trend. He anticipates that multinational corporations will increasingly depend on GCCs and Indian IT services providers, recognizing them as a cost-effective solution, even with an additional 25% cess factored in.
Nasscom’s Official Response
In response to the White House’s proclamation, Nasscom, India’s leading IT industry body, issued a statement acknowledging that while they are thoroughly examining the order’s intricacies, policy adjustments of this magnitude could create widespread ripple effects across America’s innovation landscape and broader job market.
Nasscom also noted that Indian technology services companies would face impacts, as business continuity for on-shore projects might be disrupted, necessitating significant adjustments. The organization assured that companies would collaborate closely with their clients to navigate these changes and manage transitions smoothly.
However, Nasscom concluded by emphasizing a crucial point: both India and companies focused on the Indian market have been systematically decreasing their dependence on H-1B visas over recent years by boosting local hiring efforts.