Trump’s H-1B Fee Hike To Raise Costs For IT, Push Firms Towards Offshore Model: Brokerages

US President Donald Trump’s proposed $100,000 H-1B visa fee will sharply raise costs for US and Indian IT firms, according to brokerages. Tier-1 companies may face 2–4% earnings pressure, though higher offshoring, localisation, and AI adoption could partly offset the hit.

The new measure requires US companies to pay $100,000 per year to sponsor each H-1B worker, a sharp increase from previous fees that typically ranged from $1,700 to $4,500.

Rahul Jain, Dolat Capital commented that, currently Tier 1 IT companies get about 1,500-5,000 approved H1B Visas every year and thus this fees would cause significant incremental cost of $150-$500 million in additional fees.

"Also purely from economics point of view about 30-50% cost arbitrage would go away in this fees over the tenure of visa validity period," he said.

Jain further highlighted that, over a period of time Indian vendors have significantly lowered their H-1B dependency. Also outsourcing/AI can part mitigate the challenge.

"This seems a much more amicable path versus proposed HIRE Act Bill as this would check on misuse and would get limited to very high skilled specialised resources and at the same time create additional revenues of $6-8 billion for USCIS," he said.

Jain noted that, if this goes through it will discourage Indian outsourcer for H-1B based hiring as purely on cost basis this could hurt earnings of upto 2-4% for Tier 1 names.

Centrum Broking noted that, the changes pose substantial new costs for major tech employers such as Amazon, Microsoft, Google, Meta etc., which rely heavily on international talent to fill specialised roles.

The brokerage highlighted that, last year, Indian citizens accounted for 71% of all H-1B approvals as per official data, meaning the visa hike will especially affect Indian technology workers and their sponsoring US companies. Currently, the visas are valid for three years and can be renewed for another three years.

"The Trump administration said that the $100,000 fee is aimed at ensuring that the people being brought into the country are “actually very highly skilled” and do not replace American workers," as per Centrum Broking.

The brokerage shared that, Indian IT services companies have high degree of localisation for onsite employees (65-70%) and dependence on H-1B is limited. In medium term, it might push further outsourcing of tech jobs from the US.

HDFC Securities noted, that there is no immediate impact or cost for current H-1B holders who are already within the United States and not traveling.

"Current H-1B holders who are outside the US at the time of the rule change will not be allowed re-entry unless their employer files a petition supplemented by the $100k payment. The high cost will apply to initial applications and renewals," it added.

The brokerage noted, companies like TCS, Infosys will be highly reluctant to renew existing visas or apply for new ones due to the prohibitive cost.

As per HDFC Securities, sending employees to the US become significantly more expensive. Some cost may be passed on to clients as well.

"US tech companies are expected to shift more work offshore to Global Capability Centers in India instead of using H-1B visas," it added.

The brokerage highlighted, Indian IT services will see increase in offshoring and near-shoring. "The consensus is that this rule change could effectively 'end the H1B program' in its current form due to the unsustainable cost," it added.

On near-term, the brokerage views the move as negative for the IT services sector that relies on H-1Bs and the model might change causing some disruption to projects.

On medium to long-term, the brokerage noted, that the industry delivery model will adapt and change, leading to a permanent increase in offshore work rather than onsite deployments. It is a major inconvenience but "no longer existential" for companies to send employees on H-1B.

Ambit Capital Research noted that, the proposed actions are a change in the lottery to wage and merit based selection and an increase in visa fees. If these measures materialise, companies with lower H-1B salary, higher US revenue share, higher onsite and higher H-1B dependence will be hurt harder.

"Assuming 60-67% of salary cost onsite, the impact could be 70-450 bps if the minimum salary is raised to $120k," it added.

The brokerage noted that, if staggered over 2 years, given 89% visas are valid for 24-36 months, annual impact could be bps.

"In such a scenario, Persistent, Wipro, TCS, could hurt more; Mphasis and HCLT would be less impacted. Offsets are increased offshoring, near-shoring and more locailisation," it added.