H-1B fee hike to prompt higher offshoring to India

IT cos are of the view that Trump administration may come up with more such sudden surprises.

Bengaluru: The new H-1B visa rule with higher entry fee by the US administration will lead to increased offshoring by companies including global technology giants. According to experts in the know, the intended consequence of the H-1B visa fee hike is likely to be opposite for the US market as companies will try to get more work done from offshore locations like India.

“Visa restrictions will only drive more offshoring than bringing jobs in the US. There is going to be emotional stress and unwelcomeness with H-1B professionals that thought coming to the US was a positive development in their career. There is a high possibility that it will not stop here and other forms of visa like B, L Green Card will also targeted during next renewal,” Ashish Chaturvedi, Executive Research Leader at HFS Research told Bizz Buzz.

He, however, said that many American technology companies have bought in several tech professionals in the post Covid period and may face disruption due to the new rule. “Most Indian companies have operated 100 per cent offshore project mode for multiple engagements so they would be able to able to adapt and adjust. However, it is just not the services sector, but the American tech companies have hired a lot of H-1B workers post Covid. So, there is likelihood of disruption,” Chaturvedi added.

Last week, Trump administration has announced that employers have to pay $100,000 entry fee for bringing in foreign workers under H-1B visa programme. This has sent shockwaves across global technology industry, which usually take the H-1B visa route for hiring tech talent in the US. India is a major beneficiary of the H-1B visa programme as 70 per cent of the professionals are from India during 2024.

Even many technology professionals were asked to return to the US on urgent basis before the 22 September deadline. However, after much hue and cry, the officials from the White House have clarified that the new H1B visa fee would be required to be paid once by the employer for an individual employee. Similarly, the new norm will not be applicable to existing H-1B visa holders. Moreover, existing H-1B visa holders are absolutely free to move in and out of the US without any restrictions. Post these clarifications, the impact on Indian IT services companies is going to be minimal. “There will be very less short-term impact after the rules are clarified. But companies now understand that Trump administration can come up with sudden surprises. Now, they will try to insulate their portfolio through more offshoring or higher local hiring, depending on the situation,” said an industry source.