H-1B visa shock now, outsourcing tax next? US bill threatens double blow to Indian IT giants

Barely hours after the $100,000 H-1B visa fee stunned Indian IT, a second threat is brewing. A controversial new bill introduced in the U.S. Senate — the HIRE Act of 2025 — proposes a steep 25% tax on outsourcing jobs overseas, sparking fears of a double whammy for India’s tech giants.

The Halting International Relocation of Employment (HIRE) Act, introduced this month by Republican Senator Bernie Moreno, has not yet passed — but if it does, it could severely penalize U.S. companies that send service jobs abroad, especially to countries like India.

The bill calls for a 25% excise tax on payments made by U.S. businesses to foreign service providers for work that benefits American customers. It also eliminates the ability to deduct such expenses, making offshore contracts far costlier.

For Indian IT firms — including Infosys, TCS, Wipro, HCL, and Cognizant — already reeling from the visa fee shock, the implications are serious. These companies have long depended on U.S. clients for a major chunk of their revenue, and the proposed outsourcing tax could slash margins, spark contract renegotiations, or accelerate a pivot to local hiring and automation.

The bill also proposes a new Domestic Workforce Fund, redirecting the tax revenue into American worker training programs. It features aggressive anti-avoidance clauses, warning firms against using shell entities or intermediaries to dodge compliance. Penalties for violations could reach 50% of unpaid tax.

While the bill must still move through committee, clear both chambers of Congress, and receive the President’s signature, its mere introduction is setting off alarms in India’s export-driven IT sector.

If passed, the HIRE Act — combined with the H-1B fee spike — could reshape U.S.-India tech ties, pushing outsourcing into politically sensitive territory and forcing Indian firms to rethink their global strategy.