After US President Donald Trump announced a significant hike in H-1B visa fees, concerns within the Indian IT sector have notably increased. However, analysts suggest that the impact of the H-1B visa application fee hike on Indian IT services firms is expected to be limited, according to reports by IANS.
One key reason for this limited impact is the reduced reliance on H-1B visas by major Indian IT companies over the past decade. This shift has been driven by increased localisation and offshoring efforts, which have minimized dependence on H-1B visa holders. As a result, the immediate effect of the increased visa fees is unlikely to heavily impact the leading Indian IT firms.
That said, the medium-term implications could be more significant. Analysts highlight that the elevated cost of service delivery in the US may lead to a structurally higher cost base. Consequently, higher delivery costs might prompt companies to reassess their existing operating models and explore various mitigation strategies.
The degree of impact is expected to vary across firms, depending on factors such as their US market exposure, onsite workforce composition, and reliance on non-local talent. Thus, the situation following President Trump’s visa fee hike announcement remains a point of concern for the industry.
Historically, visa-related challenges have created disruptions. The report further emphasizes that since H-1B lotteries and petition cycles generally occur in Q4-Q1, the earliest material impact of the fee increase is likely to be seen in FY27 petition cycles.
In response to these changes, service providers are expected to accelerate offshoring efforts and expand nearshore operations in Canada and Mexico. Additionally, companies may pursue acquisitions in Europe and the Asia-Pacific (APAC) regions to diversify geographically. Investment in automation and artificial intelligence (AI) is also anticipated to enhance productivity, as noted by IANS.
These shifts could make Global Capability Centres (GCCs) in India more attractive to professionals, especially as on-site opportunities shrink and clients increasingly demand better rate realisation and efficiency gains.
Regarding the market outlook, IANS reports that India’s equity markets may experience some near-term volatility; however, overall valuations remain significantly higher than historical averages. Meanwhile, valuations in the IT sector have corrected over the past 6-12 months amid a weak demand outlook.
The report also points out that while global risks—such as US tariffs—pose short-term challenges for export-driven sectors, India’s macroeconomic fundamentals continue to be resilient.
(With inputs from IANS)
https://www.mid-day.com/news/world-news/article/h1b-visa-fee-hike-will-have-limited-impact-on-indian-it-firms-says-analysts-23595425
