US firms rethink strategy, eye shift to India after Trump's H-1b visa move

US President Donald Trump's H-1B visa restrictions are expected to expedite the relocation of key operations to India, driving the growth of Global Capability Centres (GCCs) in the country, Reuters reported on Tuesday, citing economists and industry insiders. 

The US's new policy, which includes raising the cost of H-1B visa applications to $100,000 from $2,000-$5,000, has placed additional pressure on US firms that rely on skilled foreign workers to fill critical talent gaps.

As a result, many US companies are expected to turn to India, where more than 1,700 GCCs are already established, serving as hubs for high-value operations ranging from research and development to finance and drug discovery.

Rohan Lobo, partner and GCC industry leader at Deloitte India, told Reuters, "GCCs are uniquely positioned for this moment. They serve as a ready in-house engine." He said several US firms were reassessing their workforce needs in light of the visa changes. He also noted an uptick in activity across financial services and tech, particularly among firms with exposure to US federal contracts.

Lobo predicted that GCCs would eventually take on more "strategic, innovation-led mandates" as businesses look to streamline operations and move critical tasks in-house.

The new visa restrictions have prompted renewed urgency among companies to move high-end operations to India, as well as other offshore destinations. Lalit Ahuja, founder and CEO of ANSR, which has helped firms like FedEx and Target set up GCCs in India, stressed the sense of urgency. "There is a sense of urgency," Ahuja said, adding that the new changes would only speed up the offshoring trend. 

Even before Trump's increase in H-1B visa application fees and plans to prioritise higher-paid workers, India was already expected to host over 2,200 GCCs by 2030, with a market size approaching $100 billion. Ahuja noted that the recent visa changes would only accelerate this trend: "This whole 'gold rush' will only get accelerated."

The shift is likely to lead to "extreme offshoring," said Ramkumar Ramamoorthy, former managing director of Cognizant India. He noted that the pandemic had already shown that many key tech tasks could be performed remotely, prompting firms to reconsider their global strategies.

Sajjid Chinoy, Chief India Economist at JPMorgan, had earlier explained that while the H-1B visa changes might have a short-term negative impact, they would eventually benefit India by accelerating offshoring. "Even though efforts by the US may push up the relative cost of H1B workers, it will lead to a broader push towards greater offshoring, which has benefited India in the last few years in the form of strong service exports," Chinoy told CNBC International.