New US rule modernising H-1B program, India likely to be impacted

IT service companies, which have traditionally depended on the H-1B programme, will need to reshape their workforce strategies as Donald Trump’s MAGA (Make America Great Again) and ‘America First’ policies may tighten visa regulations. This may involve ramping up local hiring in the US, potentially driving up costs due to higher salaries, compliance requirements and training expenses, say industry experts.

The Department of Homeland Security has announced a new rule modernising the H-1B programme by streamlining the approval process and increasing flexibility to better allow employers to retain talented workers. Effective on January 17, the final rule was supposed to improve requirements for the H-1B non-immigrant visa categories.

However, the ongoing debate, including proposals to increase minimum salaries and impose additional fees, could pose significant challenges for Indian IT services companies operating in the US.

“Higher minimum salaries—potentially exceeding $1,00,000 annually—would directly raise manpower costs for the IT services companies, which rely heavily on H-1B visa holders for client projects. Additionally, increased fees, like the recent proposal to charge up to $10,000 per visa for H-1B petitions, would further escalate operational expenses,” shared Neeti Sharma, CEO, of TeamLease Digital.

The US President’s approach is anticipated to prioritise the interests of US businesses, with his policies likely to focus on creating jobs within the country while enabling migrants to participate in the labour market in areas where local talent is insufficient, observed Aditya Narayan Mishra, MD, and CEO of CIEL HR.

“Trump’s administration is expected to support opening global markets for US companies to sell their goods and services and establish operations abroad to leverage resources in other countries. For Indian IT services, the sentiment toward their prospects is more critical than the H-1B visa issue. Positive business sentiment, coupled with the planning and execution of large-scale IT projects to modernise infrastructure and applications, would significantly benefit the sector,” he explained.

Impact on India
Sharma also pointed out that the leadership’s policies will directly impact the IT services industry in India. While pro-growth measures like tax reforms and incentives for innovation could increase IT spending, driving demand for services in areas like AI, cloud, and cybersecurity, economic uncertainty limiting discretionary budgets might result in companies cutting back on non-essential IT projects, therefore impacting revenues.

“A push for domestic job creation in the US could reduce offshoring opportunities, forcing Indian IT firms to invest in local hiring or nearshore models. The overall impact will depend on how policies balance growth with restrictions,” she said.

Commenting on Infosys’ H-1B visa dependency, CFO Jayesh Sanghrajka said that the company’s dependence has reduced significantly over the years during the Q3 results announcement.

“Our onsite mix has reduced significantly. We used to be in the 30 per cent rate, but now is 24 per cent. Our nearshore has increased significantly. Within our US onsite population, our H1 independent folks are now over 60 per cent. We have built a pretty resilient model from that perspective and are more confident about where we are versus where we used to be earlier.” The Hindu BusinessLine