The Trump administration's new rule imposing a staggering $100,000 fee for each new H-1B worker hired from outside the United States is poised to deliver a severe financial blow to major Indian IT and staffing firms. Industry analysts warn this move will have punishing consequences for the outsourcing sector, which has long been in the crosshairs of US policymakers from both major parties.
Multinational Staffing Firms Bear the Brunt
A recent Bloomberg analysis reveals that the fee, described as the most significant restriction yet on skilled foreign worker employment under Trump, will disproportionately impact multinational staffing companies that act as intermediaries. The firms set to be hardest hit include Indian industry titans Tata Consultancy Services (TCS), Infosys, and Cognizant Technology Solutions.
The data is stark. Between May 2020 and May 2024, nearly 90% of new H-1B hires at these three companies received approval at US consulates abroad. This means the workers were sourced from outside the US. If the $100,000 fee had been active during this four-year period, it would have cost each company hundreds of millions of dollars in additional visa charges.
The Staggering Potential Costs for Indian IT Majors
Delving deeper into the numbers, the financial impact becomes breathtakingly clear. For Infosys, more than 93% of its new H-1B hires in that timeframe—over 10,400 workers—would have attracted the fee. This translates to a potential visa charge bill exceeding one billion dollars.
The story is similar for its peers. TCS would have been required to pay the $100,000 fee for approximately 6,500 workers, which constitutes 82% of its newly approved H-1B workers during the period. Cognizant, meanwhile, would have faced the charge for more than 5,600 employees, representing 89% of its new H-1B hires.
Long-Term Industry Shifts and Political Backdrop
Even if legal challenges succeed in blocking the fee quickly, industry observers anticipate a steep decline in visa demand. This policy is expected to accelerate the existing trend of placing more project teams and workers at offshore delivery centers outside the United States.
The H-1B program, the primary US visa route for foreign workers with bachelor's degrees, has traditionally been dominated by large tech and IT firms. These companies secure the majority of the 85,000 visas available annually. However, the program faces persistent criticism. Both Republican and Democratic lawmakers have accused companies of using the H-1B as a cheaper alternative to hiring American workers, despite rules requiring employers to pay a "prevailing wage." Notably, early-career H-1B workers often earn well above the US median wage.
The Bloomberg analysis also highlighted a key trend: over the past four years, more than four out of every ten new H-1B hires approved were workers from outside the US, rather than international graduates already present in the country from American colleges. This statistic underscores the direct channel the new fee aims to disrupt, directly affecting the operational model of global IT service providers.
