US $100,000 H-1B fee to slightly dent Indian IT margins as pass-through rises: Report

The US decision to impose a USD 100,000 fee on new H-1B visas for foreign workers is expected to trim only 10-20 basis points from the operating margins of Indian information technology (IT) services companies in the next fiscal year. According to Crisil Intelligence, the incremental cost is likely to be partially passed through to clients, with the pass-through estimated at 30-70 per cent, as reported by ANI.

Indian IT companies, which posted operating margins of around 22% last fiscal, are adjusting to the fee by sharing the cost with clients. Crisil noted, “The pass-through is estimated at 30-70 per cent. The reliance of IT companies on H-1B visas has been decreasing over the past few years. The trend began in 2018 when the denial rate increased to 24 per cent, leading firms to expand offshore delivery, open nearshore centres and hire locally in the US, even though the denial rate eased to three per cent in 2024.”

Data from the U.S. Citizenship and Immigration Services (USCIS) highlights the declining dependence on H-1B visas. Between 2017 and 2025, the number of Indian employees on H-1B visas for top IT companies, including TCS, Infosys, Wipro, and HCL, almost halved from 34,507 to 17,997, representing a negative compound annual growth rate of 9%.

Between October 2023 and September 2024, 34,507 H-1B visas were issued for these four companies, accounting for roughly 50% of the industry’s revenue, with 35% for initial employment and 65% for continuing employment. Crisil noted that initial employment shares are expected to decline over the medium term.

The H-1B fee directive, effective September 21, 2025, excludes existing visa holders and renewals. “For the current fiscal year, there will be no impact as the H-1B requirements will have been fulfilled by now,” the report stated.

India’s IT services industry is projected to generate USD 143-145 billion this fiscal, marking a 2-4% revenue growth over the previous year. However, growth for the next fiscal is expected to be marginal or flat. Employee costs accounted for 55-57% of sales, while visa expenses contributed only 0.02-0.05% of total employee costs, with H-1B fees ranging between USD 2,000 and USD 5,000 per person. Crisil estimated that if the share of initial H-1B applications remains constant, the new fee could raise visa costs to ~1.0% of total employee costs, and if reduced, costs would remain between 0.3-0.6%.

Crisil also observed that the visa fee hike may accelerate offshoring and could deter students from pursuing higher studies in the US, slightly reducing US revenue share and affecting medium-term inflows.