The entire landscape of US firms hiring overseas workers is expected to change dramatically. A bill to protect American workers from outsourcing by disincentivizing U.S. companies from chasing cheaper wages and hiring foreign workers has been introduced by a US lawmaker.
Called the HIRE ACT, the Halting International Relocation of Employment Act has been presented by Senator Bernie Moreno to prevent outsourcing by discouraging American businesses from seeking lower salaries and employing overseas labor.
The HIRE ACT 2025
The HIRE ACT proposes to levy a 25% tax on outsourcing payments, defined as any money paid by a U.S. company or taxpayer to a foreign person whose work benefits consumers in the United States.
Additionally, the US firms will not be allowed to take a tax benefit out of this payment. HIRE ACT states that no deduction will be allowed for any outsourcing payment.
Who all will be impacted?
Effectively, all US companies outsourcing business operations to foreign companies or employing foreign workers will be impacted. A 25% tax will apply to the money that US businesses pay foreign outsourcing corporations to provide services to US consumers.
The term ‘outsourcing payment’ means any premium, fee, royalty, service, charge, or other payment made in the course of a trade or business, to a foreign person, and with respect to labor or services the benefit of which is directed, directly or indirectly, to consumers located in the United States.
The maximum impact of the HIRE ACT could be felt by BPOs, consulting firms, and IT companies providing services to American firms, amongst others. There could be big implications for the Indian IT firms as well.
With offshoring becoming expensive for US firms, they could start looking inwards rather than hiring foreign workers.
If the bill is passed, the amendments will apply to payments made after December 31, 2025.
HIRE ACT 2023
Incidentally, in July 2023, Congressman Raja Krishnamoorthi introduced the High-Skilled Immigration Reform for Employment(HIRE) Act, which was totally different from the recently introduced HIRE Act in 2025.
Krishnamoorthi’s HIRE Act aimed at doubling the number of H-1B visas available annually from 65,000 to 130,000 to allow American employers, including those in critical technology sectors, to draw the best talent from around the world.
The High-Skilled Immigration Reform for Employment Act aimed to close the skills gap by providing additional funding to strengthen U.S. elementary and secondary school science, technology, engineering, and math (STEM) education programs.