By M Muneer
With the September 19 announcement of the new H-1B restrictions, the panic of Indian information technology (IT) and IT-enabled services giants is understandable. They will incur big expenses on lobbyists and probably will have to cut down on estimates of bottom lines. Analysts warn of doom. CEOs paint a picture of collapsing margins and lost competitiveness.
Let’s be honest. This isn’t about protecting workers or saving jobs. This is about protecting profits. The Indian IT industry’s outrage has little to do with fairness and everything to do with greed.
For decades, these IT companies have perfected a business model built on wage exploitation. Hire thousands of engineers in India at rock-bottom pay, send the cheapest among them overseas on H-1B visas, and bill clients at global rates. The companies pocket the difference; the workers get crumbs.
The truth is ugly: most Indian H-1B employees in the US are not living middle-class lives by American standards. On a purchasing-power basis, their lifestyles are only slightly better than their peers back home. The “American dream” becomes a mirage, while their employers rake in billions.
And now, when new rules drive parity pay in terms of CTC at least—so that an Indian engineer in California earns the same as an American peer—the industry howls. Not because workers will lose, but because shareholders will.
Wage Parity: Fairness and Productivity
Listen to the rhetoric from IT boardrooms: fairness, equality, meritocracy. It sounds noble until you follow the money. When real fairness knocks on the door—in the form of mandated wage parity—the same companies cry foul.
The hypocrisy is glaring. At a time when India’s own prime minister admits that 60% of the country still relies on free food grain, billion-dollar IT firms are busy lobbying Washington to preserve their profit margins. Stakeholder capitalism? Hardly. This is shareholder capitalism dressed in moral slogans.
Let’s destroy the myth that paying workers fairly makes companies uncompetitive. It doesn’t. Productivity, not just wages, drives costs. Some of the world’s most profitable firms pay handsomely and still dominate global markets.
In fact, higher pay often boosts productivity. Research proves it. Companies that invest in their people see better output, lower turnover, and stronger results. We’ve seen this in India itself: HDFC Bank, which rewards its most critical roles above industry averages, outpaces rivals in productivity. The equation is simple: quality follows compensation.
And anyone who has seen Silicon Valley up close knows this: American engineers, paid more, deliver more. Indian IT firms, by contrast, survive on headcount, not innovation. That model won’t last in a world of AI and automation.
The Future of Indian IT
If IT companies don’t shell out more for retaining the best talent, they will have to recruit the US citizens who will incur higher wages. They are likely to try lower pay for Indians to adjust for the 100k new fee, which might see good talent leaving for other countries. Also, there is the likelihood of not finding the right US talent. This may result in reduced margins for sure, if they want to stay competitive.
Meanwhile, US taxpayers benefit from higher income tax revenues. The society at large gains. The only losers? Shareholders whose profit margins dip slightly. Let’s not weep for them.
Lobbyists warn that higher wages will lead to layoffs. But history teaches us otherwise. Every technological shift has caused churn, yes—but workers who adapt, upskill, and evolve find better roles. The same will happen here. Skilled H-1B professionals will remain in demand. Some may lose jobs, but many will land better ones. The “land of opportunity” still rewards talent.
The greater danger lies not in higher wages but in clinging to a broken model of cheap labour arbitrage.
Indian IT companies must face reality: the days of exploiting wage gaps are over. Business models built on underpaying workers abroad while enriching a small elite at the top cannot survive in the long run. If these companies truly believe in meritocracy, they should welcome the new rules and start paying workers what they are worth—whether they are white, black or in-between, whether they are US or Indian citizens.
The new H-1B rules are not anti-worker—they are pro-worker. They do not weaken the industry—they expose its dependence on exploitation. They don’t punish talent—they reward it.
The panic over H-1B reform is nothing but boardroom theatrics. CEOs cry apocalypse, analysts paint doom, and lobbyists burn millions on campaigns to protect what? Not jobs. Not workers. Profits. The truth is simple: higher wages don’t kill industries—they strengthen them.
In Silicon Valley, the best-paid engineers are also the most innovative. Yet Indian IT clings to a broken model of cost arbitrage, pretending that exploitation is efficiency. It isn’t. It’s a racket. As one VC quipped, “If your business model collapses when people get paid fairly, you never had a business—you had a racket.”
The new rules are not anti-industry; they are pro-worker, pro-fairness, and pro-future. The age of wage slavery is closing fast. The only question is: will Indian IT evolve or implode?
The writer is Fortune-500 advisor, start-up investor and co-founder of Medici Institute for Innovation.
Disclaimer: Views expressed are personal and do not reflect the official position or policy of FinancialExpress.com. Reproducing this content without permission is prohibited.