US HIRE Bill clouds Indian IT outlook but faces steep political hurdles

US President Donald Trump

The recent US Halting International Relocation of Employment (HIRE) Bill, introduced by a private member in the US Senate, alongside tariff warnings from former Trump trade adviser Peter Navarro, has unsettled India’s IT industry. However, analysts believe these moves represent political noise and may not pose imminent disruption for India’s $280 billion technology industry.

The bill proposes a 25 percent tax on certain payments to foreign firms for services consumed in the US, but experts say it is unlikely to pass in its current form. Still, the rhetoric adds uncertainty to India’s $280 billion outsourcing industry.

“For this act to go through, significant lobbying and voting are required. Right now, it seems highly unlikely because this would impact nearly 70 percent of all US corporations,” said Arindam Sen, EY India Global Business Services & Operations Partner, in an interview with Moneycontrol.

The bill and comments from US trade officials have created a climate of caution within the Indian IT sector.

“The immediate effect could be US companies delaying new deals and investments in India for optics,” said Pareekh Jain, founder of EIIR Trend. While deals continue to be signed-evidenced by large order books for IT providers last quarter-official announcements have slowed, especially in the US market, with more activity reported from Europe.

This uncertainty comes at a challenging time for Indian IT, which relies heavily on the US market-top five IT firms including Tata Consultancy Services (TCS), Infosys, HCLTech, Wipro and Tech Mahindra generate 50-65 percent of revenues from North America. The sector is already facing weak discretionary tech spending, geopolitical tensions, and muted hiring due to AI-driven efficiency gains.

Many major Fortune 500 companies are customers to the Indian IT giants including Citigroup, JPMorgan Chase, Bank of America, Pfizer, Microsoft, Saint Gobain to name a few.

Industry watchers caution that even if the bill faces an uphill battle in Congress, it adds to the risks Indian IT firms must factor into their business models.

Sen highlighted two major challenges posed by the HIRE Bill: its discriminatory nature and the difficulty in sourcing the specialized talent needed domestically.

On the contrary, in an interview with Moneycontrol, Ashwini Vaishnaw, Minister of Information Broadcasting, Electronics and IT, addressed the fears of Indian IT professional losing jobs amid US  tariff threats.

He said that India is actively engaging with global corporations and foreign governments to ensure that the Indian technology industry continues to thrive, even as fears rise over a potential crackdown on outsourcing by Trump.

Navarro’s Perspective

Navarro’s support for taxing Indian remote workers reflects a hardline faction within the Trump administration, rather than mainstream US policy.

“But the HIRE bill is a formal proposal that, while unlikely to become law soon, adds another layer of uncertainty to the US-India IT corridor,” said Phil Fersht, CEO of HFS Research.

Fersht noted that even without tariffs, Indian IT firms are facing rising costs in the US and slower client spending.

Visa restrictions, tariff threats, and geopolitical tensions collectively cast a shadow over the US-India IT relationship. Taxing remote Indian talent could squeeze margins, slow deal cycles, and push firms to diversify beyond the US. Large US tech companies would also feel the strain given their heavy reliance on Indian engineering talent and offshore delivery.

Earlier, the Trump administration had imposed tariffs on India, including a 25 percent reciprocal duty on Indian goods and an additional 25 percent levy tied to India’s purchase of Russian crude oil-among the steepest tariffs globally. Trump accused India of “fuelling Russia’s deadly attacks on Ukraine.”

Uncertainty and Cost Pressures

Fersht echoed Jain’s view that the bigger issue is the uncertainty generated by such political theatrics.

“Visa restrictions, tariff threats, and geopolitical tensions create a cloud over the US-India IT corridor. This doesn’t mean Indian talent won’t continue powering global tech, but clients and providers are factoring in higher risk premiums,” he said.

Even without tariffs, Indian IT firms face rising operational costs in the US.

“Taxing remote Indian talent would further squeeze margins, extend deal timelines, and encourage diversification away from the US market. Big Tech would also be impacted due to their dependence on Indian engineering talent and offshore delivery,” Fersht added.

US Tech Giants Bet on India

Despite trade tensions and tariff talk, American tech giants like Google, Apple, Meta, Microsoft, and OpenAI are ramping up investments in India. From new engineering hubs to AI partnerships and major office leases in Hyderabad and Bengaluru, India remains a critical part of their global growth strategies.

These companies—Facebook (Meta), Amazon, Apple, Microsoft, Netflix, and Google (Alphabet)—have collectively hired over 30,000 employees in India over the past year.

Tariff Viability: Unlikely in Near Term

Experts widely agree that a tariff targeting the Indian IT sector is unlikely in the immediate future and may primarily serve as leverage in broader trade negotiations.

“Indian IT companies have multiple delivery centers worldwide, including in the US and EU, making it possible to avoid such tariffs. Also, much of the work is manpower-intensive and difficult to relocate at scale,” said analysts Piyush Pandey and Vagish Nandal of Centrum Broking.