H-1B shock: Small Indian IT firms likely to bear the maximum brunt

Analysts also note that existing visas appear unaffected, with the proclamation focused on petitions lacking the $100,000 payment, particularly for workers outside the US.

The US has unveiled a dramatic change to its skilled-worker regime, introducing a $100,000 annual fee per H-1B worker via presidential proclamation effective September 21, 2025. Legal challenges are likely, but if implemented as announced, the measure would sharply raise the cost of onsite staffing for Indian IT providers. Industry observers say the heaviest impact will fall on smaller and mid-sized firms, which lack the scale, pricing power and US bench strength of the majors. The H-1B pipeline matters: the programme’s regular cap is 65,000 (plus a 20,000 master’s cap), and Indian nationals account for roughly 70 percent of approvals in recent years.

By contrast, the top Indian IT companies have reduced visa dependence by hiring locally in the US. TCS, for instance, says more than half of its US workforce is local, and its leadership has argued that lower H-1B availability can be offset by moving work offshore. That cushions giants like TCS, Infosys, HCL, Wipro and Tech Mahindra.

For smaller providers, the arithmetic is harsher. Recent USCIS data shows 2025 approvals such as TCS ~5,505 and Infosys ~2,004; while these volumes are manageable for billion-dollar firms, a $100,000 per-visa annual levy would be punishing for mid-caps that rely on subcontractors and thin onsite margins. Existing application charges — roughly $1,700–$4,500 depending on options — would sit on top of the new levy. Observers expect many smaller firms to shift more delivery offshore or nearshore, or pare back US onsite work; some may revisit pricing or even withdraw from onsite-heavy bids.

With Indian markets shut over the weekend, the first domestic equity reaction will come Monday; ADRs of large Indian IT names did fall on Friday after the announcement. Analysts also note that existing visas appear unaffected, with the proclamation focused on petitions lacking the $100,000 payment, particularly for workers outside the US. Even so, the signal is unambiguous: smaller Indian IT firms are likely to bear the maximum brunt unless they can pivot quickly to offshore delivery, local US hiring, or automation-led models.