A recent executive order by U.S. President Donald Trump imposing a $100,000 fee on new H-1B visa applications has sent shockwaves through India’s $283 billion information technology sector, which relies heavily on the U.S. market for 57% of its revenue. The policy, effective from September 21, 2025, is forcing Indian IT companies to overhaul long-standing operational models, rethink talent deployment, and brace for potential legal and financial challenges. The move has also triggered a sharp decline in Indian IT stocks and is expected to accelerate the growth of global capability centers (GCCs) in India and beyond.
A Blow to the H-1B Model
India has long been the primary beneficiary of the H-1B visa program, securing 71% of approved visas in 2024, far ahead of China at 11.7%. The program has enabled Indian IT firms to send skilled workers to the U.S. for client projects, a practice central to the industry’s onsite-offshore delivery model. However, the steep new fee has made sponsoring new H-1B visas prohibitively expensive, prompting companies to prioritize only critical roles for visa applications. This shift is likely to limit opportunities for many skilled professionals and disrupt the traditional “American Dream” for Indian tech workers.
The new H1B visa fee is the latest blow to what’s long been one of the most resilient elements of U.S.-India partnership: People to people ties. US visa/immigration policies, coupled w/rising anti-India sentiment among the MAGA base, are a concerning part of the bilateral crisis.
— Michael Kugelman (@MichaelKugelman) September 20, 2025
The policy has already been confused, with some H-1B visa holders rushing back to the U.S. before the rule’s implementation, fearing re-entry restrictions. Clarifications from the White House confirmed that the fee applies only to new applicants, not existing visa holders or renewals, but the initial uncertainty led to significant disruption, including abandoned travel plans for workers from India and China.
Stock Market Fallout and Industry Response
The announcement triggered an immediate market reaction, with the Indian IT sub-index dropping 2.6% on September 22, 2025, after an initial plunge of nearly 4%. Major firms like Tata Consultancy Services, Infosys, and Wipro saw share declines of around 2%, while Persistent Systems fell by 4%. The U.S.-listed shares of Infosys and Wipro also dropped significantly on the preceding Friday, reflecting investor concerns about the sector’s growth prospects amid ongoing geopolitical and economic uncertainties.
#WATCH | Hyderabad | On H1B visa fee raised by US, Hyderabad MP and AIMIM Chief Asaduddin Owaisi says, “71% of the Indians are H1B visa holders and a large share of them are from Andhra Pradesh and Telangana. India receives around $125 billion in remittances, a large part of… pic.twitter.com/vzsnkRQ8qs
— ANI (@ANI) September 22, 2025
Industry body Nasscom warned that the fee hike could disrupt business continuity for U.S.-based projects and harm America’s innovation ecosystem. Analysts predict that the policy will strain IT firms’ margins, delay project timelines, and force renegotiations with clients who may demand lower costs or restructured delivery models. Some projects may shift entirely to offshore or near-shore locations like India, Mexico, or Canada to mitigate costs.
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Strategic Overhauls and GCC Expansion
The visa fee hike is pushing Indian IT companies to adapt swiftly. Experts anticipate a move toward hiring more U.S. citizens and green card holders, reducing reliance on H-1B visas, and accelerating offshore delivery from countries with lower operational costs. The policy is also expected to fuel the growth of GCCs—high-value hubs that handle operations, finance, and R&D for U.S. firms. India, which hosts over half of the world’s GCCs, is projected to see its GCC market grow to $100 billion by 2030, employing up to 2.8 million people.
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Regions like Canada, Mexico, and Latin America are also likely to see increased GCC investments due to their proximity to the U.S. and cost advantages. This shift could reduce the need for cross-border talent mobility while enhancing local hiring in the U.S. and automation efforts to offset rising costs.
Legal and Economic Challenges Ahead
Immigration lawyers anticipate legal challenges to the executive order, citing its sudden implementation and significant impact on businesses. The high cost of new H-1B visas is expected to limit sponsorships to only the most essential roles, potentially reshaping employer demand for foreign talent. Meanwhile, the Indian IT sector faces additional pressures, including a proposed 25% tax on outsourcing payments and weak revenue growth due to cautious U.S. client spending amid inflation and tariff uncertainties.
The convergence of these factors signals a broader transformation in the global services economy. As Indian IT firms navigate this new reality, they must balance cost pressures, client demands, and innovation to maintain their competitive edge in a rapidly changing landscape.