Indian IT companies are expected to adjust their strategies to deal with the recent sharp hike in H-1B visa fees announced by the US administration, a new report said on Tuesday.
On September 19, US President Donald Trump signed an executive order imposing a fee of $100,000 for new H-1B visa applications, a steep jump from the existing cost of around $1,500.
The move is likely to hit Indian IT firms, which have traditionally relied on the visa program to send skilled workers to the US
The data compiled by Nuvama, however, said that the overall impact on Indian IT companies may remain limited, as the sector has already reduced its dependence on H-1B visas over the past eight years.
“This shift has given companies a head start in cushioning the effects of the latest policy change,” the report said.
According to Nuvama, firms are expected to tackle the higher costs through measures such as nearshoring, offshoring, and hiring more local talent in the US While some short-term financial and operational challenges are unavoidable, in the longer run, increased offshoring is expected to ease the pressure.
The report also noted that most Indian IT services firms may avoid paying the new fee altogether, as it makes H-1B visas uneconomical.
The median salary for Indian IT workers on H-1B visas ranges from $80,000 to $120,000, and adding another $100,000 fee would make the arrangement financially unviable.
Instead, companies are likely to look at other options such as renegotiating contracts with clients to share costs, hiring locally in the US, or expanding nearshore operations in countries like Canada and Latin America, which share the same time zone as the US.
A stronger focus on offshoring to India or other cost-efficient regions is also expected, as per the report.
The report added that while the industry will face volatility in the near term, the situation is likely to stabilise as IT companies adapt to the new environment and discover more efficient ways of doing business.
