H-1B fee hike pros and cons: How $100K will reshape U.S. tech hiring, leave startups scrambling

The U.S. administration's decision to impose a hefty $100,000 fee on H-1B visa applications has sent ripples across industries that rely on skilled foreign labour.

In a detailed post on X, U.S.-based investor Deedy Das provides a balanced take on how this new rule will impact different sectors and what it means for Indian workers, many of whom are heavily dependent on the H-1B program. While some sectors will feel the brunt of the fee increase, others, particularly Big Tech, will likely absorb the cost. However, Das warns that the sudden, poorly communicated change could harm the U.S.'s appeal to international talent.

Who is most affected by the $100,000 H-1B fee rule?

According to Das, the industries most impacted by the new fee will be early-stage startups, IT services companies, and institutions like universities and hospitals. “If you're paying

Notably, companies like Wipro, Infosys, TCS, Cognizant, and HCL, often referred to as the WITCH companies, are also likely to be severely affected. These firms are notorious for their reliance on H-1B visas, with more than 15% of their workforce on such visas, mostly from India, Das noted.

On the other hand, Big Tech companies like Netflix, Meta, Nvidia, and others will likely absorb the additional cost, as it represents a small percentage of their R&D spend. “Reed Hastings, Netflix CEO, further doubled down on it and they pay '$500k/yr' for an engineer,” Das mentioned, suggesting that these companies will continue business as usual despite the fee hike.

The pros: More American workers and a streamlined H-1B process

Despite the negative impact, there are some potential upsides to the new policy. Das said that he sees it as an increased incentive for companies to hire more American workers, which could reduce the dependence on foreign talent for certain roles. Furthermore, he believes the new rule could make the H-1B lottery process easier for the “best international workers in the US.”

He also argues that the policy could “net out” by reducing the number of lower-wage H-1B abuses, particularly by IT companies relying on cheap labour. This could help streamline the program and bring more highly skilled professionals to the U.S., rather than companies seeking out cheaper, less skilled labour.

Key myths about the H-1B program

Das also tackled some common myths surrounding the H-1B program. “People drastically overestimate how reliant tech is on H-1Bs,” he said, pointing out that most tech companies—aside from the large IT services firms—use H-1B visas for fewer than 15% of their workforce to avoid being labelled as "H-1B dependent employers." He further clarified that while 120,000 H-1B visas are approved annually, only around 35% of them are new applicants, with many renewals continuing indefinitely as workers await green cards.