H1B VISA – HOW THE $100,000 SHOCK THREATENS INDIA’S IT EMPIRE
Backdrop
Pay or pack up. That’s the blunt message Indian IT giants received in September 2025 when the United States dropped its biggest visa bombshell in decades: a jaw-dropping USD 100,000 fee for every H-1B visa application filed by companies heavily dependent on the program. For India’s USD 250 billion IT services industry, the global back-office and coding powerhouse that has built Silicon Valley’s apps, maintained Wall Street’s servers, and even powered Uncle Sam’s healthcare systems, this isn’t just a policy change. It’s an existential jolt. For years, the H-1B visa has been the artery pumping Indian tech talent straight into the beating heart of the US economy. Names like Infosys, TCS, Wipro, and HCL became household legends in the outsourcing world precisely because they could place tens of thousands of engineers in American client sites at competitive costs. But what was once a lifeline is now a chokehold. At USD 100,000 per head, sending a single software engineer to California could cost as much as hiring two or three domestically. For firms running on razor-thin contracts, that’s a crippling burden.
The US has packaged the move as “protecting American jobs” and “levelling the playing field,” a familiar refrain in Washington every election season. But in India, the move is being read very differently, as an economic weapon disguised as immigration reform. Trade analysts see it as a non-tariff barrier – one that effectively sidelines Indian firms while giving US companies an artificial advantage in their own backyard. And because nearly 60–70% of all H-1B visas issued historically have gone to Indians, no one doubts who the real target is. So the question hanging over India’s IT empire is simple yet brutal – will it pay up, pack up, or reinvent itself before the rules of the global tech game leave it behind?
What is an H1-B Visa?
The H-1B visa is one of the United States’ most sought-after non-immigrant work permits, designed to let American employers bring in highly skilled foreign professionals for “speciality occupations.” These are jobs that typically demand a bachelor’s degree or higher in fields such as information technology, engineering, mathematics, finance, healthcare, or scientific research. For India, and especially for its tech sector, the H-1B is far more than paperwork; it has long been the bridge connecting Silicon Valley to Bengaluru. Each year, the US government makes only 85,000 new H-1B visas available, of which 65,000 are open under the general quota and an extra 20,000 are reserved for candidates holding advanced degrees from American universities. Because demand dwarfs supply, visas are allotted through a computerised lottery, with hundreds of thousands of applications competing for this narrow slot. In recent years, the overwhelming majority of those applications, often more than two-thirds, have been filed on behalf of Indian professionals, underlining just how central this program is to India’s global tech footprint.
An H-1B visa is normally granted for three years and can be extended up to six years, sometimes longer if the applicant is in the process of securing permanent residency. The visa, however, is strictly tied to a specific employer, which means workers cannot switch jobs freely; a new petition must be filed if they want to move. Employers must also certify, through a labour condition application filed with the US Department of Labour, that hiring a foreign worker will not undermine American wages or working conditions. The special status of the H-1B lies in the way it has served multiple constituencies at once. For US companies, it has filled skill gaps that the domestic labour market has struggled to cover, especially in software engineering, data science, and systems design. For Indian IT giants such as Infosys, TCS, Wipro, and HCL, it has been nothing less than the backbone of their outsourcing model, allowing them to place engineers directly at client sites in America and manage complex projects on the ground. For thousands of Indian families, the visa has represented opportunity and upward mobility: it is often the first step toward long-term American careers, permanent residency, and a better life for the next generation. And at a geopolitical level, the H-1B has become a symbol of interdependence between the world’s largest democracy and the world’s largest economy. Every tweak in its rules is felt not just in corporate boardrooms and political capitals but also in living rooms from Washington to New Delhi.
What’s the new rule?
On September 19, 2025, the White House issued a presidential proclamation titled “Restriction on Entry of Certain Nonimmigrant Workers” that dramatically rewrites who can enter the US on a new H-1B and on what financial terms. The proclamation directs the Secretary of Homeland Security and related agencies to require a supplemental payment of USD 100,000 to accompany any new H-1B petition filed on or after September 21, 2025, and to restrict adjudication/entry for petitions that are not accompanied by that payment for a 12-month window. USCIS promptly posted clarifying guidance – the new USD 100,000 requirement applies prospectively and is targeted at initial admissions or readmissions, meaning beneficiaries already in H-1B status inside the US (extensions or changes of status filed while the worker remains in the US) are generally not subject to the supplemental payment, and petitions filed before the effective time are exempt. However, the guidance also leaves many operational details murky, how the payment is to be remitted, whether it is refundable, exact accounting and verification processes, and edge cases such as consular renewals or cap-exempt filings, and legal practitioners immediately flagged serious implementation questions.
Before the proclamation, the typical set of H-1B employer costs per petition, USCIS filing fee + ACWIA training fee + fraud-prevention fee + optional premium processing + attorney costs, generally ranged in the low-thousands to, in larger cases with premium processing and outside counsel, roughly USD 2,000–8,000 per petition. The H-1B program itself is limited in supply (the common annual cap is 85,000), and historically, the lion’s share of those visas has gone to Indian nationals. Estimates in coverage put Indian beneficiaries at well over half, 60-70%+ of H-1B immigrants, which is why Indian IT firms and New Delhi read the move as a targeted economic shock.
What to expect next?
With the USD 100,000 H-1B fee now in place, Indian IT firms are staring down an unprecedented crossroads. The immediate reality is grim; sending engineers to the US under the traditional delivery model has suddenly become exponentially more expensive, forcing companies to rethink decades of strategy. Firms like TCS, Infosys, Wipro, and HCL are already exploring alternatives. Some are accelerating the shift to remote and hybrid delivery models, relying more on offshore teams in India, Eastern Europe, and Southeast Asia, while sending only critical personnel onsite. Others are considering nearshoring, setting up smaller operational hubs closer to clients in Europe, Canada, and Latin America to reduce reliance on US-based visas.
But the challenge goes beyond logistics and costs. Many long-term client contracts were structured around the assumption that engineers could be placed onsite in the US at relatively modest cost. The fee disruption threatens these margins and may even lead some clients to renegotiate contracts or explore alternatives, including homegrown tech firms or local talent. Indian companies must also now invest in legal and compliance strategies to navigate the murky waters of the new rule, which remains riddled with operational ambiguities, exemptions, and potential litigation.
Conclusion
Will this change the IT outsourcing landscape forever? Almost certainly. Even if the fee is eventually reduced or delayed due to legal or diplomatic pushback, the shock has revealed the vulnerability of the traditional H-1B model. Companies are being pushed to diversify geographically, rethink workforce structures, and accelerate automation, AI-driven coding, and knowledge transfer. The era of relying heavily on visa-based deployment in the U.S. is likely drawing to a close. In short, Indian IT firms may survive, and even thrive, but the way they operate, compete, and deliver will almost certainly never be the same. The choice is stark – adapt to a new global talent reality or risk paying the price for clinging to an old model.