How Trump’s H-1B Fee Hike Could Impact Indian IT

The H-1B visa has long been the golden ticket for Indian IT professionals, allowing them to work in the US in speciality tech roles. For India’s IT industry, H-1Bs are a lifeline; they enable companies to send skilled engineers onsite to serve American clients, often at lower costs than hiring locally. The reality is different now.

In a surprise proclamation, US President Donald Trump announced a dramatic hike in H-1B visa fees to $100,000 per application. Initially, there was confusion that this would be an annual charge on each visa, enough to spark panic among companies and workers; however, the White House quickly clarified that this fee is a one-time payment, applicable only to new H-1B petitions and not to renewals or existing visa holders.

Now, this policy twist could have real implications for your portfolio. India’s IT services giants (TCS, Infosys, Wipro, etc.) heavily service US clients, and any hit to their US operations or cost structure can ripple through earnings and share prices. But is this a temporary blip or will the IT industry need a hard reset?

Let’s try to break it down.

What Has Changed?

Trump’s $100K Fee: A new $100,000 charge now applies to each fresh H-1B petition, up from the earlier ~$2,000–$5,000 (plus a few surcharges). That’s a tenfold jump, effective September 21, 2025, and slated to last 12 months unless extended. Additionally, if applications exceed the 85,000 cap, priority will be given to applicants with higher wages.

A Shift from Past Policy: In Trump’s first term, the focus was stricter scrutiny and eligibility tweaks, not big fees. Denial rates spiked to ~24% in 2018, but direct cost hikes never materialised. Moving forward, the denial rates dropped to 21% in FY19, 13% in

FY20, 4% in FY21, and only 2% in FY22. However, this $100,000 surcharge seems like a stark departure.

Who’s Hit the Hardest: Indian IT services firms, which file thousands of H-1B petitions, face the brunt. TCS alone had ~5,500 approvals in FY2025, Infosys had around 2,000, and Wipro had ~1,500. Collectively, top Indian firms filed ~13,400 visas, meaning costs could soar from around $13 million to ~$1.34 billion, which is about 10% of their annual profits. Even deep-pocketed firms can’t ignore that hit.

Top 10 Companies with H-1B Hires

But Why H-1B Matters So Much?

Indian IT services companies have grown successful through a global delivery model, where work is split between offshore (India) and on-site (client locations, such as the US). The H-1B visa is the vehicle that made the onsite part possible.

Cost and Competitiveness: By sending Indian engineers to work at US client sites on H-1 B visas, companies can offer services at a lower billing rate than their US competitors. The wage difference has been substantial; studies show hiring an H-1B worker in an “entry-level” tech position can save US employers up to 36% in salary compared to a local hire.

Revenue Reliance: Traditionally, Indian IT firms have been heavily dependent on the H-1B visa, as the US is their largest market. In fact, people of Indian origin account for over 70% of all H-1B approvals annually. China comes in a distant second.

Meeting Client Demands: H-1Bs have been a flexible staffing tool to fulfill clients’ requests. Without adequate visas, Indian vendors risk saying “no” to business or doing everything from offshore (which competitors might use against them). A disrupted talent pipeline means projects could be delayed or lost if companies can’t get the right people onshore at the right time.

How Did IT Stocks React?

When news of the $100K visa fee broke, market reactions were swift. In the US, shares of companies with big outsourcing operations dropped, for instance, Cognizant (which is US-based but heavily reliant on Indian talent) fell about 4.8% on the Nasdaq, and Infosys’ American depositary shares slid 3.4% on the NYSE.

Back in India, IT company stocks, including TCS, Infosys, Wipro, Tech Mahindra, HCL Technologies, and Coforge, fell as much as 6% on September 22, 2025. The NSE’s IT index had underperformed the broader market even before this news. As of September 26, 2025, it was down nearly 20% year-to-date in 2025, compared to a 5% rise in the Nifty 50 index, partly due to concerns about global tech spending. The news of the visa fee hike was expected to cause further short-term volatility in these stocks.

Investors realised that companies wouldn’t immediately have to shell out for their entire current H-1B workforce, only for new visas moving forward, giving firms time to adjust. As a result, the decline in stock prices, although noticeable, remained in the single digits rather than triggering a panic crash.

The Likely Impact: Costs, Talent, and Competitive Shifts

Beyond the short-term stock blips, let’s analyse the deeper, longer-term impacts this fee hike could have on the Indian IT sector:

Profit Margins Under Pressure: The most direct hit is financial. In the short term, Indian IT companies are going to feel a margin squeeze. According to a news report, the likes of TCS, Infosys, and Wipro could collectively incur an additional $150-$550 million in immigration costs, resulting in an immediate EBITDA hit of 7%-15%.

If companies have to pay $100K for each new H-1B employee, that’s an added cost that will either shave off operating margins or be passed on to clients. According to a report by Crisil, the companies are expected to pass on 30-70% of the cost to clients.

Talent Pipeline Disruption: Over the long run, such a fee makes companies far more selective about whom they send to the US. Already, commentary from industry experts suggests firms will prioritise only essential or high-value postings if each comes with a six-figure price tag. Additionally, companies may have to rotate people less frequently (to avoid incurring new fees), which could cause fatigue for those stuck abroad longer or hinder fresh talent from going onsite.

Competitive Landscape Shifts: If local hiring in the US becomes relatively cheaper than sponsoring an H-1B, companies that already emphasise local recruitment gain an edge. Accenture stated that the visa changes affect only ~5% of its US workforce.

On the flip side, American tech companies like Microsoft, Google, and Amazon (which also use thousands of H-1Bs) will face higher costs too, which could level the playing field somewhat. It’s notable that US tech giants collectively had tens of thousands of H-1B workers themselves, so this isn’t solely an India problem. For example, in FY24, the top five US firms together secured nearly 28,000 approvals.

Is There Any Turnaround?

All said, the Indian IT industry is no stranger to protectionist challenges. From past visa quota tightenings to wage rule changes, they’ve typically responded by adapting their business models.

It’s worth noting that Indian IT firms have been reducing their H-1B reliance in recent years, partly in response to past US visa crackdowns. The biggest companies now have a majority of their US staff who are local hires. According to news reports, Infosys states that over 60% of its US workforce is now comprised of local Americans, and its on-site employees on H-1B visas have decreased from 30% to approximately 24% in FY25. HCL and Wipro have only ~20% of their US employees on H-1B visas (meaning 80% are hired locally).

Let’s not forget the role of industry bodies and diplomacy. The Indian government has warned of “humanitarian consequences” for families split by this sudden rule. While Trump’s administration is relatively hawkish on immigration, major US companies and even universities (which use H-1Bs for researchers) are lobbying against these measures. Indian IT firms will thus also be in wait-and-watch mode, hoping this is more of a negotiating tactic than a permanent burden.

So far, leaders in the sector have struck a balance of concern and confidence. For instance, TCS’s CEO, K Krithivasan, recently explained that if H-1B availability drops, they can “compensate or move work to India” without severely impacting operations.

Investor Takeaways

Here are key points to consider for your investment strategy:

Near-term Earnings Impact: Indian IT firms may face near-term margin pressure as the $100K visa fee adds upfront costs. Large caps like TCS and Infosys can absorb the hit through scale and automation, while mid-tier firms with a heavier reliance on H-1B visas could see sharper strain.

Stock Volatility vs Long-term Value: IT stocks may dip on this news, but history shows rebounds as companies adapt. Investors with a long view might even find opportunities in the dark times.

Outsourcing Risk & Diversification: The fee highlights the regulatory risks associated with dependence on US visas. Investors should diversify across sectors and rebalance their portfolios that are too heavily weighted in IT.

Focus on Resilient Players: Companies with more local US hires, balanced onsite-offshore models, or high-end services will manage better than those relying heavily on visas or commoditised work.

Macro Awareness: Keep watch on US-India trade talks and potential legal challenges. A policy reversal could ease pressure quickly, while a prolonged fee regime may shift growth offshore.

To Wrap Up

To answer the question of whether Trump’s hefty H-1B fee hike is a short-term blip or a long-term impact, it is undeniably a headwind for India’s $200+ billion IT services industry, but it’s far from a death knell.

The Indian IT sector has shown remarkable resilience over the decades. It weathered Y2K, the dotcom bust, the 2008 financial crisis, and previous US visa crackdowns.

For investors, the advice is to stay calm but vigilant. Keep an eye on the policy winds, but don’t lose sight of the long-term fundamentals.

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Disclaimer: This analysis is for educational purposes and does not constitute investment advice. Market conditions can change, and past performance is not indicative of future results. Investors should conduct their own research and/or consult a certified financial advisor before making investment decisions.