When US President Donald Trump imposed a $100,000 application fee on H-1B visas in September, it caught the IT industry off guard.
Tech giants Tata Consultancy Services (TCS) and Infosys now find themselves in the blast zone. The proposal, which charges employers $100,000 for every new H-1B worker hired from outside the US, is the toughest restriction yet on skilled foreign labour.
Industry experts say the fee will hit IT staffing and outsourcing firms the hardest, particularly those that rely heavily on overseas talent.
Why TCS and Infosys are most exposed
A Bloomberg News analysis shows that multinational IT firms acting as middlemen for US clients would be disproportionately affected. At the top of that list, TCS, Infosys and Cognizant. Between May 2020 and May 2024, nearly 90% of new H-1B hires at these companies were approved at US consulates, meaning they would all trigger the new fee.
For Infosys, the numbers are staggering. More than 93% of its new H-1B hires, over 10,400 workers, would have faced the $100,000 charge, translating into more than $1 billion in visa fees. TCS would have had to pay the fee for 6,500 workers, or 82% of its newly approved H-1B employees. Cognizant would be hit for more than 5,600 workers, or 89% of new hires.
Industry observers say companies are already cutting back on visa applications and shifting work outside the US. “We’re already seeing that happen,” said immigration attorney Jonathan Wasden, who represents many IT employers told Bloomberg. “The fear is that if you have truly exceptional talent overseas, those people are definitely going to be missing out.”
Why H-1B visa system is targeted?
Large IT and tech firms dominate the H-1B visa program, which offers 85,000 visas a year to skilled foreign workers with at least a bachelor’s degree. Both Democrats and Republicans have accused companies of using H-1B visas as cheap labour. Employers counter that workers must be paid a “prevailing wage,” and that entry-level H-1B salaries often exceed the US median wage. Still, the numbers tell a story. More than 40% of new H-1B hires over the past four years came from outside the US, according to Bloomberg’s analysis, not from foreign students already studying in America.
In 2020, the Trump administration introduced an online H-1B lottery that allowed companies to register workers cheaply and without full paperwork. The system exploded.
By fiscal 2024, there were 758,000 eligible registrations for just 85,000 visas. Biden-era officials blamed IT consultants for “gaming the system” and revamped the process last year. Trump’s new $100,000 fee goes much further.
White House spokeswoman Taylor Rogers said the policy would give US companies more certainty and discourage firms “from spamming the system and driving down wages.”
What are the challenges ahead?
Legal challenges are already underway, including one led by the US Chamber of Commerce. But many employers are not waiting for the courts. The IT consulting industry had already reduced new H-1B hires since 2024, and the fee could accelerate the trend, said Steve Hall, chief AI officer at Information Services Group.
US companies are likely to increase investments in India, the source of most H-1B workers, over the next few years, he said. “If you want to access the world’s best talent, you have to go where the talent is,” Hall said to Bloomberg.
Infosys and IBM respond
Most major H-1B employers declined to comment. Infosys pointed to earlier remarks by CEO Salil Parekh, who said only a minority of its US workforce requires visa sponsorship. “without any disruption to their services today and into the future,” Parekh said to Bloomberg.
IBM, which hired 88% of its H-1B workers from abroad, said it has already adjusted its approach. “Our focus remains on ensuring we have the right skills to meet clients’ evolving needs,” said IBM spokesperson Miki Carver to Bloomberg.
Critics of the H-1B system say the fee may finally change employer behaviour. “The fee was a step in the right direction, but employers will figure out how to adapt,” said Ron Hira, a political scientist at Howard University to Bloomberg. “Will that be a higher skill, higher wage cohort? That’ll be the first sign.”
Some firms are already planning to skip lottery entries for workers who would need consular processing, said Finn Reynolds of legal tech firm Lawfully.
“The Trump administration’s $100,000 fee, combined with the weighted-lottery rule, has created an entirely new set of incentives that will reshape market behavior vis-a-vis the H-1B lottery,” he said to Bloomberg. Lawfully estimates next year’s H-1B lottery entries could fall 30% to 50%.