H-1B Visa Fee Hike to $100,000: Impact on Indian IT, Talent Flow, and Offshore Models

The US has imposed a steep $100,000 fee on new H-1B visa applications, effective 21 September 2025—a massive increase from the previous $1,000–$5,000 range. The move is intended to curb perceived exploitation of the programme, encourage firms to hire US workers, and prioritise higher-skilled, higher-paid applicants. For Indian tech professionals—who accounted for 71% of H-1B visa recipients in 2024—this could impact costs, job mobility, and earnings.

Historically dominated by Indian IT giants such as Tata Consultancy Services (TCS), Infosys, and Cognizant, the H-1B visa landscape is now increasingly led by US tech firms, raising the stakes for offshore outsourcing models and India–US talent flows.

H-1B Visa Overhaul: What You Need to Know

The H-1B visa is a non-immigrant US visa that allows employers to temporarily hire foreign workers in speciality occupations that require theoretical or technical expertise, typically in fields such as information technology (IT), engineering, finance, and healthcare. As of September 2025, major reforms have reshaped the programme.

A new executive order mandates a one-time $100,000 fee for all new H-1B petitions filed from outside the US after 21 September 2025, aiming to prioritise high-skilled, high-wage talent. This fee does not apply to renewals or petitions submitted before that date.

Additionally, the Department of Labor is revising prevailing wage levels to ensure H-1B workers are paid competitively, discouraging low-wage outsourcing. The Department of Homeland Security is also implementing a rule to favour higher-paid applicants in the lottery selection process.

These changes reflect a broader push to curb misuse and elevate the programme’s standards. The H-1B cap remains at 85,000 annually, including 20,000 for US master’s degree holders, and the electronic registration system continues to be the gateway for applicants.

Impact of the H-1B Visa Fee Hike

Here is how the increased H-1B visa fee will impact the tech industry:

• Direct Cost Impact on IT Margins

The $100,000 H-1B visa fee represents a 9,000% increase from the previous average of $1,000–$1,500 per application. For Indian IT firms, where the median H-1B salary ranges between $80,000 and $120,000, the new fee equals or exceeds annual compensation, making the visa economically unviable.

Jefferies estimates that this hike could erode Earnings Before Interest and Taxes (EBIT) margins by 50–150 basis points per H-1B employee. Top-tier firms like Infosys and TCS, which derive over 55% of their revenue from the US, face significant recalibration of their costs. Mid-cap firms such as Mphasis and Persistent, with 75–80% US exposure, are even more vulnerable.

• Shift in Talent Acquisition Strategy

The fee hike is prompting a strategic pivot toward local hiring. Indian IT firms have already reduced H-1B dependency, with less than 50% of their US workforce currently on H-1B visas. Many companies are accelerating local recruitment to mitigate cost shocks, especially for roles with median salaries below the new visa fee threshold. This shift is expected to increase US-based hiring by 12–18% in FY26–FY27, particularly in Tier 2 cities where wage inflation is lower. Firms are also exploring partnerships with US staffing agencies to absorb short-term demand without visa overheads.

• Reconfiguration of Delivery Models

The offshore-onshore delivery mix is undergoing recalibration. Historically, Indian IT firms maintained a 70:30 offshore-to-onsite ratio. Post-fee hike, analysts expect this to shift to 85:15 by FY27. Nearshoring to Canada and Mexico is gaining traction. These locations offer visa-free access and cost arbitrage of 20–30% compared to US onshore centres. The reconfiguration can also drive investment in cloud-based remote delivery.

• Impact on Visa Lottery Dynamics

The H-1B lottery system, which processed 4,79,953 applications annually, will see a sharp decline in participation due to the prohibitive cost. United States Citizenship and Immigration Services (USCIS) data suggest that FY27 applications may drop by 60–70%, especially from mid-sized firms and startups. This will reduce competition for the 85,000 annual cap, skewing selection toward firms willing to absorb the fee. The new fee applies only to fresh applications, not renewals, which operate on a 3+3-year cycle. Consequently, firms may prioritise renewals and internal transfers over new hires, altering workforce mobility and talent inflow patterns.

• Stock Market Reaction

The announcement triggered immediate market volatility. On 22 September 2025, TCS, Infosys, and Wipro stocks fell by 2% intraday. Mid-cap IT stocks, such as LTIMindtree and Mphasis, saw sharper declines of up to 6% due to higher exposure to the US market.

• Client Contract Renegotiations

The fee hike is forcing a renegotiation of existing client contracts. Indian IT firms typically operate on multi-year fixed-price contracts with 3–5% annual escalation clauses. With the new visa fee, firms are invoking force majeure and cost pass-through clauses to renegotiate rates.

Clients in the banking and healthcare sectors, which require onshore compliance, are most affected. Some firms are offering blended delivery models with 40% remote and 60% onshore to retain margins without breaching Service-Level Agreements (SLAs).

Impact on STEM Talent Pipeline

The fee hike disrupts the STEM talent pipeline from India. Over 70% of H-1B visas are issued to Indian nationals, primarily in engineering and computer science. With the new cost barrier, students graduating from US universities face reduced sponsorship opportunities.

This may lead to a 40–50% drop in Optional Practical Training (OPT)-to-H-1B transitions in FY261. The talent vacuum could affect innovation ecosystems in Silicon Valley and Research Triangle Park, where Indian professionals constitute a significant percentage of the tech workforce.

Operational Risk and Business Continuity

The abrupt implementation of the fee poses operational risks. Firms with ongoing H-1B petitions must either absorb the cost or halt onboarding. NASSCOM warns that a decent percentage of onshore projects may face delays or reallocation in Q4 FY25. Microsoft and JP Morgan issued advisories urging H-1B employees to return to the US by 21 September 21 to avoid visa denial. The disruption is particularly acute in critical infrastructure and healthcare IT, where exemptions are limited. Firms are activating contingency plans involving remote shadowing, phased transitions, and emergency subcontracting to maintain business continuity.

Regulatory and Policy Uncertainty

The executive order includes a sunset clause, expiring after 12 months unless extended. Section 1(c) allows waivers for national interest roles, but the criteria remain undefined, creating ambiguity for compliance teams. Legal experts anticipate a surge in waiver petitions, potentially overwhelming USCIS adjudication capacity. The lack of clarity on renewal fees, exemption thresholds, and retroactive applicability is causing compliance bottlenecks. Firms are allocating additional legal budgets and are planning to increase their immigration compliance spend for FY26. The uncertainty is also delaying strategic workforce planning and cross-border mobility programmes.

Global Competitive Rebalancing

The fee hike may inadvertently benefit non-US delivery hubs. European firms like Capgemini and Atos, which rely less on H-1B visas, are expected to gain market share in US contracts. Indian firms are also expanding in the Asia-Pacific and the Middle East markets, with HCL signing a $2.1 million deal a few months back.

As of Q1 FY2025, Indian IT services companies derive 55–60% of their revenue from the US market, followed by 22–25% from Europe, and the rest from other regions. However, post this executive order, it is expected to decline significantly in the coming years.

This rebalancing could reshape global tech outsourcing flows, reducing US dominance in offshore delivery models.

Conclusion

The $100,000 H-1B visa fee marks a significant turning point in the US immigration policy, especially for Indian tech firms, professionals, and global delivery models. In the near term, expect cost shocks, market volatility, and aggressive thinking about hiring, contracts, and staffing models. Over the medium term, we may see more onshoring, nearshoring, and a shift toward delivering work from India or other locations rather than moving people.

For Indian tech stakeholders, this means rethinking their strategies: being more selective about US hiring, investing in remote delivery capacity, focusing on higher-value, harder-to-automate skills, and closely monitoring legal and policy developments.

For traders and investors, separating hype from fundamentals will mean observing whether companies can pass on costs, adapt their models, and how market pricing reflects these structural changes.

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