Indian IT firms all set to adapt even as $100k H-1B visa fee poses short-term pressure: Report

Indian IT companies are all set to face the impact of a steep hike in H-1B visa fees, but analysts say the sector is already well-positioned to navigate the change, according to a report by Nuvama.

On Friday, September 19, US President Donald Trump signed an executive order imposing a USD 100,000 fee for new H-1B visa applications, up sharply from the previous USD 1,500. While the move could affect operational and financial dynamics, analysts believe Indian IT firms’ reduced reliance on H-1B visas over the past eight years will help mitigate the shock, as per the report stated by ANI.

“We believe Indian IT companies shall mitigate this impact by higher nearshoring/offshoring and/or hiring local talent,” the report stated.

Mitigation strategies and operational shifts

Despite the looming fee, Nuvama's report highlights that Indian IT companies have already adjusted their business models to be less dependent on H-1B visas. In the near term, some financial and operational pressures are unavoidable, but over the longer term, higher offshoring is expected to absorb much of the impact.

Most IT services companies are unlikely to pay the USD 100,000 fee, as the economics no longer make sense. With median H-1B salaries ranging from USD 80,000 to USD 120,000, an additional $100,000 annual fee would make visas uneconomical. Instead, firms are expected to adopt alternative approaches such as:

• Renegotiating contracts with clients to share additional costs.

• Hiring more local talent in the U.S. to reduce reliance on H-1B workers.

• Expanding nearshoring operations to regions like Canada and Latin America.

• Increasing offshoring to India or other cost-effective destinations.

As Nuvama notes, “Over the medium to long term, the situation is likely to stabilise as the sector companies discover more ways to do business efficiently.” This could involve a stronger reliance on offshore staffing and greater local recruitment in overseas markets. Nevertheless, the sector is expected to face near-term volatility as it adjusts to the higher cost environment.