Highlights:
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$100,000 H-1B visa fee applies only to new applications from FY27; current visa holders and renewals are not affected.
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Indian IT firms may shift toward local US hiring or expand offshore delivery centers to avoid high fees.
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On-site revenues could decline, but lower staffing costs may improve profit margins.
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Legal challenges to the fee hike are expected in US courts, creating uncertainty.
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H-1B visas for Indian IT firms dropped from 14,792 in 2015 to 10,162 in 2024, though Indians still hold over 70% of visas.
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Major US tech firms like Amazon, Microsoft, and Google account for a large share of H-1B approvals.
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The sector is spending over $1 billion annually on US-based upskilling and hiring.
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Analysts say the fee hike may delay but not eliminate dependence on H-1B visas, prompting long-term strategy reassessment.
The planned $100,000 H-1B visa fee for new applications is expected to change how Indian IT companies operate in the United States. According to Motilal Oswal Financial Services, if an IT firm were to apply for 5,000 H-1B visas in FY27, the cost would reach about $500 million in fees alone.
H-1B Visa Fee Hike
The H-1B program is one of the main routes for skilled foreign workers, particularly in technology. Each year, the US issues 65,000 regular H-1B visas along with 20,000 more for applicants with advanced US degrees. Indian tech professionals hold more than 70 percent of these visas.
Until now, companies paid between $2,000 and $5,000 per application, depending on size and other criteria. The new fee represents a 20–50 times increase beginning in FY27.
Motilal Oswal noted that rather than pay these costs, many Indian IT firms are likely to expand offshore delivery centers or increase local hiring in the US. This could reduce on-site revenues but also cut expensive US-based staffing costs, potentially improving profit margins.
Industry Adjustments
Visa applications for FY26 are already complete, so the change will only apply from FY27 onward. Over the past decade, Indian IT companies have reduced reliance on H-1B visas by hiring locally and setting up delivery centers close to US clients.
“If an IT company were to apply for 5,000 H-1Bs in FY27, the annual fee alone would amount to USD 500 m (5,000 x USD 100,000). Given the magnitude of this fee, it is likely that Indian IT companies will avoid new H-1B filings altogether, opting instead to expand offshore delivery or increase local hiring,” the firm said.
Motilal Oswal added that if new H-1B filings decline, on-site revenues would fall, but so would costs. Offshore work is more profitable, and the net impact on earnings per share could remain neutral in the medium term, even if topline growth slows.
Risk and Legal Challenges
The report noted that the fee hike order will likely face legal challenges in US courts. It may not survive in its current form.
“With localization drives in the US and higher local hiring, only about 20 per cent of employees are currently based on-site. Of this, 20-30 per cent are on H-1B visas, implying that H-1B holders represent just 3-5 per cent of the active workforce for a typical vendor,” the firm observed.
Large US technology companies such as Amazon, Microsoft, Meta, Google, and Apple account for a bigger share of H-1B applications than Indian IT vendors. Many Indian IT companies already rely on localization and subcontracting, making them better positioned to adapt.
Clarification From the US Government
On September 22, Nasscom welcomed clarification from the US government that the $100,000 H-1B fee applies only to new petitions, not existing visa holders or renewals. The clarification reduced concerns about current workers and re-entry issues.
Nasscom said Indian and India-centric firms have already reduced dependence on H-1B visas and increased local hiring. “Given this, we anticipate only a marginal impact for the sector,” the association stated.
“Moreover, with the fee being applicable from 2026 onward, it gives companies time to further step up skilling programmes in the US and enhance local hiring,” it added.
Industry players currently spend more than $1 billion a year on US-based upskilling and hiring programs, which has led to a steady increase in local employment.
Data on Visa Issuance
H-1B visas issued to leading Indian and India-centric companies dropped from 14,792 in 2015 to 10,162 in 2024. Despite this, Indian professionals still hold more than 70 percent of all H-1B visas.
According to USCIS data for FY2025 (as of June 30, 2025), Amazon led with 10,044 approvals. Other top beneficiaries included TCS (5,505), Microsoft (5,189), Meta (5,123), Apple (4,202), Google (4,181), Cognizant (2,493), JP Morgan Chase (2,440), Walmart (2,390), and Deloitte Consulting (2,353). Infosys (2,004), LTIMindtree (1,807), and HCL America (1,728) were also in the top 20.
Short-Term and Long-Term Impact
The current H-1B fee is about $2,000 to $5,000. Since the increase applies only from the 2026 application cycle, experts believe there will be little immediate effect over the next year. However, the long-term outlook remains uncertain.
Sajai Singh, Partner at JSA Advocates and Solicitors, said the clarification gives companies breathing room but does not eliminate future challenges.
“The clarifications tweak the applicability to new H-1B visa applicants, not existing visa holders or renewals. This means current H-1B holders can exit and re-enter the US freely without paying the fee; as the fee will apply to the upcoming H-1B lottery cycle. However, Indian IT companies that rely heavily on H-1B visas will still face significant cost increases, potentially disrupting business models and revenue streams,” Singh said.
He added: “Net-net, there may be a slight delay in the impact. But the impact will be there, requiring reassessment of business strategies. Yes, the immediate shock has slightly diluted, and so it seems like a huge relief. It’s just giving more time for the reality to set in.”
