While Indian IT firms may be relieved that proposed changes to the H-1B visa programme are unlikely to be made more restrictive, the adjustments could still significantly alter their cost structures, hiring strategies, and workforce dynamics in the United States, their largest market.
The proposed revisions, which include raising minimum wage requirements and introducing additional fees, may lead to a permanent shift in cost structures for Indian IT services firms.
Zubin Morris, partner at Little & Co, highlighted the financial impact of higher wages. “Indian IT firms, which have traditionally benefited from lower labour costs, would face substantially higher salary obligations to comply with these norms. Margins on US projects might shrink as firms absorb higher wage costs,” he said.
Currently, the minimum salary for H-1B visa holders stands at $60,000, but proposals suggest increasing it to $120,000 or more. This significant rise could disproportionately affect entry-level and mid-level professionals, narrowing the talent pipeline for Indian IT firms.
“Service providers will either need to increase salaries to comply or focus on sending senior professionals,” said Pareekh Jain, CEO of Pareekh Consulting.
The financial strain extends beyond wages. Higher filing and renewal fees, coupled with enhanced administrative obligations, will increase compliance costs. “Recruitment, onboarding, and training of local hires will further strain resources, leading to lasting changes in cost structures,” Morris added.
The new norms could also lead Indian IT firms to rethink their workforce strategies in the US. Neeti Sharma, CEO of TeamLease Digital, said, “These changes may necessitate increased local hiring, which can take time and come at a premium due to the high demand for skilled talent”.
To mitigate the impact, companies may turn to nearshore delivery centres in Canada or Mexico. “Setting up operations in nearby locations with more flexible immigration policies ensures proximity to US clients while reducing reliance on visas,” Morris noted.
Tata Consultancy Services (TCS), Infosys, and Wipro, which are among the largest recipients of H-1B visas, will also focus on enhancing remote work and automation to offset rising costs. “Companies will deepen client relationships to shift more work offshore, optimising costs while reducing dependence on US-based deployments,” Sharma said.
Upskilling employees in high-value areas like artificial intelligence, cloud computing, and cybersecurity will further help firms pivot to less labour-intensive, high-margin offerings.
Despite the challenges, the Indian IT industry is better prepared to adapt than it might have been a few years ago. Jain said, “If these changes had come two years ago, it would have been disastrous. But with headcount reductions and increased offshoring in recent years, the industry is better positioned to navigate these shifts”.
