The H-1B noose tightens on Indian IT

On 19 September, US President Donald Trump made a startling announcement: the H-1B visa fee would now be $100,000 per entry, with effect from 21 September.

The magnitude of the disruption, especially its potential to derail India’s infotech sector and its impact on the wider economy, sent alarm bells ringing both at home and in the United States.

As per the latest available study by the US Citizenship and Immigration Services, the number of H-1B visa holders on 30 September 2019 stood at 583,420 (‘total H-1B authorised-to-work population’). Accounting for family and dependents, the total H-1B population in the US is over one million — of which an estimated three-quarters are Indians.

The statement issued by India’s ministry of external affairs noted: ‘This measure is likely to have humanitarian consequences by way of the disruption caused to families. Government hopes that these disruptions can be addressed suitably by the US authorities.’

Belated clarifications that the fees will affect only new visas — 85,000 are added every year — and that existing H-1Bs will not be impacted has soothed some nerves but the climate of uncertainty remains, given the ambiguity written into the proclamation.

It didn’t take long for the Trump administration to up the ante, as it were, now saying that the entire process of the H-1B lottery will be rejigged to prefer those hired at higher salaries, which, in effect, will deter the hiring of freshers and even mid-career professionals on salaries at the lower end of the scale.

Sudden announcements like these create profound unease, mar trust in the stability of policy, and will, over time, force a withdrawal of workers, with harmful consequences all round.

Even if existing workers are safe for the moment, their future remains in doubt as their H-1Bs, issued for three years at a time, come up for renewal.

In 2023, under President Biden, Republican and Democratic senators introduced bipartisan legislation to reform the H-1B. Their goal was ‘to protect workers and stop the outsourcing of American jobs’. Both red and blue states have been increasingly vocal in criticising the H-1B programme, arguing that it is being used to replace American workers with foreign-born workers to slash costs, rather than to attract talent where required — the professed purpose of the quota.

The simmering resentment surfaces in the latest Presidential order that imposed the back-breaking fee: ‘To take advantage of artificially low labour costs incentivised by the programme, companies close their IT divisions, fire their American staff, and outsource IT jobs to lower-paid foreign workers… Further, the abuse of the H-1B visa programme has made it even more challenging for college graduates trying to find IT jobs, allowing employers to hire foreign workers at a significant discount to American workers.’

Large US corporations have been working the visa to their advantage to cut costs. In recent years, Indian companies in the US have reduced dependence on the H-1B and shifted to hiring US workers. So, while the entire sector will be hit, the impact on these companies will be less severe.

Between 2010 and 2025, five Indian IT companies — TCS, Infosys, Wipro, HCL Technologies and Tech Mahindra — have appeared among the top 10 visa sponsors in the US at least once. Indian firms dominated earlier years (three to four in the top 10 in the 2010–16 period) but their presence has declined lately.

According to the US data hub on H-1Bs, just one of these (TCS) is in the top 10, listed by the number of H-1B visas approved in the first half of 2025. All the others are US-based giants — Amazon, Microsoft, Meta, Apple, Google, JP Morgan Chase, Walmart, Deloitte Consulting.

Indian firms, in other words, might have seen this coming, and have taken evasive steps. However, the forces unleashed by the new fee regime are likely to exact a price. The tinderbox of growing anti-immigrant sentiment, the extreme nature of MAGA politics, bitter political jousting along with mounting pressure to create more jobs for Americans have all combined to make H-1B an easy target.

Indian software and IT services companies have long been accused of running body shops, fashioning their business success by turning labour arbitrage into a fine art. The sector has consistently denied this, arguing that they have moved up the value chain and compete on quality, not price. There is some truth in both statements.

While the sector is five decades old — if traced back to the incorporation of TCS in 1968 — Y2K was really the beginning of the boom. After nearly three decades of growing business, there has been very little innovation. At its core, the Indian edge is providing services and handling accounts rather than leading innovation.

India’s IT services sector is notorious for pushing the hard grind. The generally exploitative nature of the work, the tightly controlled employee cost that has, in some cases, kept freshers’ salaries unchanged over the years despite inflation, and a culture of stretch in the long haul produces zombies who can do no more than work at the lower end of the value chain.

While young talent in India spent their best years in this IT cage — many with the hope that they would move to the US — the ones at the top made money and acquired power. The outpouring of anger at the outrageous remarks by a once-revered sector pioneer — who insisted on 70-hour work weeks — must be seen in this context.

India and Indian companies have been happy helping themselves to low-hanging fruit. H-1B was an opportunity that became a trap. Instead of building new products and services that are the future of business, we ended up supplying wage slaves. Even as the AI revolution takes the world by storm, India and the Indian IT sector stand nowhere when it comes to breakthrough work. We have served others well. Now it appears they do not want us. And we have no idea where we want to go next.

Views are personal

Jagdish Rattanani is a journalist and faculty member at SPJIMR. More of his writing may be found here

Article courtesy: The Billion Press