Analysts see limited impact on Indian IT as White House eases concern on H-1B fee hike

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A White House clarification that the proposed $100,000 fee for H-1B visas would apply solely to initial applications has helped temper concerns over its potential disruption.

Analysts now expect the impact to be limited for IT companies, with renewals, re-entries, and existing visa holders excluded from the charge.

White House press secretary Karoline Leavitt, on a Sunday, posted on social media: “This is not an annual fee. It’s a one-time fee that applies only to the petition.”

This calms the nerves of those expecting a massive hit for Indian IT firms, particularly in terms of margins and other business parameters. Considering the number of H-1B visas issued to these companies, some analysts were expecting a squeeze of as high as 7 percent on margins.

The clarification diffused much of the panic that had gripped the industry, said Pareekh Jain, founder of EIIRTrend. “It is not for the existing workforce or the renewals… So if that is not impacted and their renewals are not impacted, then it is status quo.”

Furthermore, the adoption of Generative Artificial Intelligence (Gen AI) has reduced the number of employees required to work on a given project.

Analysts argue that companies could absorb the one-time cost in emergencies for a few critical employees, but broad-based disruption is unlikely.

“Tech companies can also pay one-time $100,000 fees. Not a big deal,” Jain added, though he flagged challenges for students aspiring to work in the US who may now face fewer opportunities.

Also, read: H-1B at $100,000: Trump's visa fee hike rattles Indian students eyeing US jobs, lifts interest in Germany, Japan

Piyush Pandey, analyst at brokerage firm Centrum, echoed this sentiment, highlighting that the fee will mostly affect those slated to travel in the near term.

For example, an employee who is supposed to go in the next month will pay higher fees. There could be a 50-100 bps margin impact, but a lot of clarification is yet to come.

“The fact that they've retracted and people can re-enter… It will not significantly alter any existing business models or operating models, but in the future, if they still have to hire someone, then it will all have to be locally,” Namratha Dharshan, Chief Business Leader - India Research at technology research and advisory firm, ISG, told Moneycontrol.

Reducing reliance on H-1B

The data support this limited impact narrative. Analysis of H-1B allocations for top Indian IT firms shows a shifting landscape.

A recent analysis shows the landscape for H-1B visas is shifting. For instance, Tata Consultancy Services (TCS), Infosys, and Wipro have all seen their visa allocations decline since 2022.

TCS, Infosys, and Wipro have seen their visa allocations decline significantly from 2022 to 2025: TCS by nearly 45 percent, Infosys by over 71 percent, and Wipro by almost 33 percent.

Additionally, these firms said they now have 20 percent to less than 50 percent dependency on H-1B visas to deploy workforce in their core market, North America.

This suggests that companies aren't abandoning the program entirely. Instead, they are making strategic adjustments. The one-time nature of the fee means it's unlikely to cause the widespread chaos that was initially feared. The overall number of visas for these top firms has dropped, but the change reflects a strategic shift, not a crisis.

Also, read: H-1B fee hike unlikely to impact Indian IT as top firms reduce dependency

Industry impact: Manageable but uneven

UBS Global Research estimated that if the fee applies only to new applicants, globally, companies like Cognizant, with a higher reliance on H-1B petitions, would see a 100-150 bps hit on operating margins, while Accenture would face minimal impact.

Staffing firms such as ASGN and RHI, which sponsor relatively few H-1Bs, could see second-order effects in contractor markets. This implies that even Indian IT staffing firms could see a similar second-order impact.

Also, read: Have robust local recruiting, hiring infrastructure: Cognizant on H-1B visa fee hike

Sandip Agarwal of Sowilo Investment Managers, while speaking to CNBC-TV18, projected that the top five Indian IT firms, which collectively generate $80 billion in revenue, could face an estimated $1 billion annual hit if 10,000 new visas are issued under the new regime. This would translate into a 7 percent squeeze on margins.

Yet, the numbers pale compared to earlier fears that the fee would apply annually and to renewals, a scenario that would have been “really problematic,” Jain pointed out.

Legal clouds remain

Even with the White House clarification, questions persist about the legality and durability of the move.

Phil Fersht, CEO of HFS Research, said the policy rests on “shaky ground.” “Fee-setting authority sits with USCIS through a cost-based rulemaking process, not unilateral executive orders. I fully expect lawsuits and an injunction before the September 21 effective date. Without congressional support, durability is low,” he warned.

"Nevertheless, the bigger story is the long-term shift: this policy, even if struck down, pushes the industry faster toward automation, platformised services, and a reduced reliance on H-1Bs,” he said.

Prashant Yadav, partner for digital and technology at Amrop India, agreed. However, in case it doesn’t, it will not be replaced by locals. “Actually, the skills do not exist locally. So what will happen is that both people and jobs will move offshore.”

Offshoring, remittances, and US workers

Daniel Low, partner at US-based civil litigation firm Kotchen & Low LLP, told Moneycontrol the proposal could reshape hiring decisions. “A $100,000 annual fee would create an obvious financial incentive that would dissuade companies from bringing H-1B workers to the US for jobs in which the same work can be performed offshore, some of those positions will almost certainly be offshored,” he said.

He added that fewer Indian tech workers in the US could reduce remittances to India, while US firms would increasingly turn to local hiring. “Companies would absorb the fee only for the most skilled and experienced visa workers who are difficult to replace with local talent.”

In the medium-term, impact would be “a mixed bag” for Indian IT firms.

India’s opportunity

For India, the proposed changes could open new doors.

Guruprasad Srinivasan, Executive Director & CEO of Quess Corp, said the policy may even become a “defining moment” for the country.

Indians currently make up approximately 71 percent of all approved H-1B visa applications, which highlights how central Indian talent is to the US.

“As on-site roles in the US become costlier, more work is likely to shift to India, creating greater opportunities and encouraging skilled professionals to build their careers at home, potentially reversing decades of brain drain,” Srinivasan said.

While US firms may face higher costs and pressure to reskill locally, India stands to benefit from a stronger workforce, accelerated innovation, and a more prominent role in global technology services.

A wider debate on talent flows

The debate has also reignited concerns around the future of research and high-skill immigration.

Hemant Mohapatra of Lightspeed Ventures, himself a former H-1B holder, warned that the policy could advantage big tech while pricing out smaller firms and midcaps. “This will lead to higher ‘return to home country’ in the short term, not just for IT workers but also for highly skilled PhD researchers. India needs to be ready to give them a career or risk losing them to other countries,” he said.

Yadav was blunt in his assessment: “There is no commercial business benefit from this move by Trump.”

The bottom line

While the White House clarification has eased fears of an immediate large-scale disruption, the proposed $100,000 fee still alters the economics of hiring skilled foreign workers in the US.

The burden will likely fall unevenly across companies, with those most reliant on H-1Bs at greater risk.

For India, the move could accelerate offshoring and strengthen its domestic talent pool, but the long-term outcome hinges on both legal challenges and how quickly global companies adapt.