H-1B visa holders make up just 3–5 percent of the US workforce at Indian IT services firms, a small share that prompted several IT companies to reassure jittery investors through notices on exchanges after President Donald Trump’s fee hike rattled the industry.
Industry analysts and brokerages too have shared that following Sunday’s clarification that the $100,000 H-1B visa fee will be a one-time fee required only on new applications, IT companies will likely explore other options such as hire more US locals than incur further costs.
Besides, the $100,000 fee will be applicable in the next round of H-1B applications, which will start only in FY27. FY26 applications are already locked in.
“Over the last decade, Indian IT vendors have reduced their reliance on H-1B visas. With localization drives in the US and higher local hiring, only ~20% of employees are currently based on-site. Of this, 20–30 percent are on H-1B visas, implying that H-1B holders represent just 3–5 percent of the active workforce for a typical vendor,” analysts at Motilal Oswal Financial Services (MOFSL) said in a note.
According to MOFSL, going by current estimated figures, if an IT company were to apply for 5,000 H-1Bs in FY27, the annual fee alone would amount to $500 million.
“Given the magnitude of this fee, it is likely that Indian IT companies will avoid new H-1B filings altogether, opting instead to expand offshore delivery or increase local hiring,” the note said.
Meanwhile, the H-1B setback weighed on listed shares of Indian large and midcap IT companies on September 22. Most fell between 2-5 percent to take the Nifty IT index down by up to 3 percent in early trade.
Indian IT’s H-1B dependency
Data accessed by Moneycontrol showed that the landscape for H-1B visas is shifting. For instance, Tata Consultancy Services (TCS), Infosys, and Wipro have reported declining visa allocations since 2022.
TCS, Infosys, and Wipro have seen their visa allocations drop 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.
Analysts believe, given the quantum of the fee to be charged, Indian IT companies could completely avoid new H-1B filings, opting instead to expand offshore delivery or increase local hiring.
This move, however, could lead to on-site revenue decline, along with on-site costs.
On a positive note, it could improve operating margins, as offshore work tends to be structurally more profitable.
What companies are saying?
IT firms including Persistent Systems, Cyient, Coforge and First Source had to update exchanges on the companies’ stance on the issue on September 21, amid growing panic.
Persistent, which gets nearly 80 percent of its revenue from America, said that, “Based on our current assessment, we hereby wish to inform that we do not expect any significant impact of the above Executive Order on our operations or financials.”
“We will continue to monitor the developments in this regard closely and will provide updates, as appropriate,” the company said in its statement.
Cyient does “not anticipate any material impact on its financials for FY26 and immediate term”. For FY25, the number of Cyient employees deployed on H1B was 6, the company said, which attributes nearly 50 percent of its revenue to Americas.
Coforge disclosed that as of FY25, United States contributed 53 percent of the company’s revenue. As of June 30, 2025, the Company had 34,187 employees.
“In FY25, the company filed only 65 new H-1B visa petitions, of which 63 were approved by USCIS. Over the years, the Company has consciously reduced reliance on new H-1B petitions for project staffing, which is reflected in the low number of fresh petitions filed in FY25,” Coforge said.
Economic incentives surpass fee
According to Daniel Low, partner at US-based civil litigation firm Kotchen & Low LLP, despite the one-time fee, it still incentivises the IT firms by the arbitrage seen in higher-paid roles far exceeds $100,000.
H-1B programme is majorly used to source cheap labor and displace higher-cost Americans, especially at lower wage levels.
“A one-time $100,000 fee would reduce the incentive to use the program to displace Americans in lower-paying jobs, where the cost savings from the labour arbitrage is less than $100,000. But the arbitrage we’ve seen in higher-paid roles far exceeds $100,000. So the fee wouldn’t be sufficient to eliminate the economic incentive to use the H-1B program to reduce corporate costs,” Low said.
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