Clarifying the specifics of the new rules, Kunal Bajaj of Choice Institutional told ET Now, “The H-1B visa fee is a one-time charge applied at the time of a new petition. Employees who already hold an H-1B visa do not need to pay this fee again. Additionally, renewals, extensions, and amendments on H-1B reissuance are not affected. The bulk of Indian IT employees on H-1B visas are not impacted.”
Over the last five years, filings by top Indian IT companies have declined nearly 45% as firms increasingly rely on local hiring. Bajaj explained that this trend will only accelerate: “IT companies have already increased hiring of US-based local employees and are relying more on offshore delivery models.”
On the financial side, Bajaj noted that margins could see a short-term hit. “In the short term, there could be cost increases, margin pressure, and project negotiation challenges, which may impact profitability on on-site projects. We estimate the margin impact to be around 50–100 basis points. Companies may manage this by passing costs to clients or using subcontracting. EPS could decline by approximately 2–4%.”
The fee jump—from around $1,500 to $100,000 per petition—could escalate costs by over a billion dollars for the top 10 IT firms if visa demand remains steady. Yet, this shift may encourage global clients to establish more Global Capability Centers (GCCs) in India. Bajaj added, “With this move, demand for GCCs could rise, as companies focus on establishing GCCs to leverage lower-cost employees. Ongoing innovation in delivery models will soften the medium-term impact.”
Regarding which companies could be most affected, Bajaj said, “The larger firms like TCS and Infosys, due to their employee pyramid, are better positioned to handle this situation, while mid- and small-tier companies might face more pressure.” He also noted that valuations provide some comfort: “All of these companies are trading below their five-year mean valuations, so the situation is not as dire as expected.”Despite the immediate challenges, the consensus is that India’s IT sector is well-positioned to absorb the fee shock, with larger firms better equipped to adapt through diversified strategies and global delivery models.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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