On Monday, September 22, 2025, the Indian information technology sector was rocked by news out of Washington: US President Donald Trump had signed an executive order mandating a one-time $100,000 fee for every new H-1B visa application. This move, a dramatic escalation from the previous range of $1,710 to $6,460 per filing, sent shockwaves through both markets and boardrooms, and left India's $283 billion outsourcing industry scrambling to assess the fallout.
The immediate impact was visible on the trading floor. According to reporting from The Federal and other business outlets, IT stocks came under heavy selling pressure, with the Nifty IT index losing nearly Rs 83,000 crore in market capitalization—a 3 percent drop in a single session. Shares of Mphasis, LTIMindtree, Coforge, and Persistent Systems tumbled between 4 and 5 percent, while sector giants like TCS, Infosys, Wipro, and HCL Tech saw declines of 2 to 3 percent. The broader market was also weak, but nothing compared to the tech sector's rout. The Sensex ended the day down 466 points, or 0.56 percent, at 82,159.97, and the Nifty shed 0.49 percent to finish at 25,202.35.
But what exactly does this fee hike mean for the Indian IT sector, and why did it provoke such a sharp reaction? The answer is a mix of economics, geopolitics, and the evolving nature of global technology work.
For decades, Indian IT companies have relied on the H-1B visa program to send skilled workers to client sites in the US, enabling them to deliver complex projects and maintain close relationships with American customers. The new $100,000 fee—a twentyfold jump from the average $3,000 per application—threatens to upend this model. As Motilal Oswal Financial Services explained, if an Indian IT firm were to file 5,000 new H-1B applications in FY27, the cost would skyrocket to $500 million, compared to just $15 million under the previous system. It's a math problem that's impossible to ignore.
Meera Shankar, former Indian ambassador to the US, put the move in context during a discussion on The Federal's Capital Beat: "It is intended in terms of [the President’s] domestic priorities where he has made anti-immigration—both illegal and legal—one of his key platforms." She noted that the fee hike serves a dual purpose, increasing pressure on India during ongoing trade negotiations. Shankar also pointed out that the move appears to contradict US commitments under the WTO General Agreement on Trade in Services, which had set quotas for H-1B visas—65,000 for general applicants and an additional 25,000 for post-graduate students.
Interestingly, it's not just Indian companies that will feel the pinch. According to US Citizenship and Immigration Services data cited by The Economic Times, American tech giants are among the biggest users of the H-1B program. Amazon led the pack with 10,044 approvals as of June 30, 2025, followed by TCS (5,505), Microsoft (5,189), Meta (5,123), Apple (4,202), and Google (4,181). Infosys, LTIMindtree, and HCL America were also prominent. As Shankar observed, "America has a shortage of talent… Accenture, Google, Meta, Amazon and Microsoft have been using the H-1B program, and it’s going to hit their ability to be competitive."
The fee hike is expected to have both immediate and longer-term effects. In the short run, current H-1B visa holders and those seeking renewals are spared, as clarified by US authorities and reported by Nasscom. This has helped ease some anxiety, at least for now. "This will lower anxiety of those who already have H-1B visas because this clarification helps a lot of them," said S Srinivasan, Editor-in-Chief of The Federal. However, uncertainty lingers for students and professionals without green cards, who now face a steeper—and perhaps insurmountable—financial barrier to working in the US.
For Indian IT companies, the strategic calculus is shifting rapidly. As Motilal Oswal noted, only about 20 percent of employees at large Indian IT vendors are currently based on-site in the US, and just 20–30 percent of those hold H-1B visas—meaning H-1B holders represent only 3–5 percent of the total workforce at a typical vendor. With the new fee, companies are expected to file far fewer H-1B applications, instead expanding offshore delivery from India or other low-cost centers, and increasing local hiring in the US—even if that means paying higher wages. Offshore work is structurally more profitable, so while on-site revenues may decline, margins could actually improve in the medium term. Still, topline growth may slow, and the need to reassess business models is pressing.
Industry experts like Ponmudi R, CEO of Enrich Money, described the hike as a near-term negative that will put pressure on margins and business models. Sumit Pokharna, VP of Fundamental Research at Kotak Securities, predicted that the full financial impact would be felt from FY28, with strains potentially showing as early as the next H-1B lottery cycle in the second half of FY27. If sourcing patterns remain unchanged, competition for on-site talent could drive wage inflation by about 10 percent and cut profit margins by 100–200 basis points. Earnings per share estimates for FY27 could see a 7–14 percent reduction. In the near term, firms are expected to lean more on subcontractors to replace expiring H-1Bs, though this too will increase costs by 20–25 percent on average.
Yet, some in the industry see a silver lining. The shift away from H-1B dependence has been underway for years. Nasscom pointed out that Indian and India-centric companies operating in the US have significantly reduced their reliance on H-1B visas and are ramping up local hiring and upskilling—spending over $1 billion annually on these efforts. The delayed implementation of the fee (it applies only to new applications from FY27 onward) gives companies time to further adapt, enhance local hiring, and invest in skilling programs for US workers.
Geopolitically, the move is seen as both a negotiating tactic and a message to domestic audiences. Shankar described it as a pressure point on India, but noted that New Delhi has shown it won't capitulate easily. "If there has to be a deal, it has to be based on some middle ground." She emphasized that India has responded with a firm yet non-confrontational stance in trade talks, seeking removal or reduction of tariffs and visa fees as preconditions for any agreement. The US, for its part, has a trade surplus with India in services, and is reportedly reluctant to bring this sector into negotiations.
Looking ahead, the landscape for Indian tech talent may be changing, but the allure of the American dream remains strong. Srinivasan argued that "the best of the best will continue to go to the United States, though they are looking for other opportunities also." The rise of Global Capability Centres and the increasing profitability of offshore delivery suggest that Indian IT's global role is far from over—it's just evolving.
As boardrooms and policymakers on both sides of the world digest the implications of Trump's H-1B visa fee bombshell, one thing is clear: the era of easy, cost-effective global mobility for tech workers is ending, and a new chapter—marked by adaptation, negotiation, and perhaps opportunity—is just beginning.
