The weekend brought a wave of panic and confusion for the hundreds of thousands of Indians holding H-1B visas. On Friday, US President Donald Trump sent shockwaves through the tech industry by announcing a staggering increase in the cost of skilled worker permits—up to $100,000, marking a potential 50-fold hike. This sudden change sparked chaos: tech firms in Silicon Valley quickly advised employees against international travel, while overseas workers rushed to secure flights back to the US. Meanwhile, immigration lawyers scrambled to interpret the new order and its implications.
By Saturday, the White House attempted to quell the unrest by clarifying that the new fee would apply only to new H-1B applicants and would be a one-time cost. However, the long-standing H-1B program, which has been both criticized for impacting American workers and praised for drawing in global talent, still hangs in the balance. Even with the recent clarification, the changes effectively threaten the H-1B pipeline that has fueled the American dream for millions of Indians and provided essential talent to various US industries for over three decades.
The H-1B visa has acted as a vital vehicle of aspiration for many in India. It has transformed small-town coders into dollar earners, allowing families to join the middle class and spawning entire industries catering to a burgeoning class of globally-mobile Indians. In the US, this visa program has supplied a steady influx of talent to fill crucial roles in labs, hospitals, classrooms, and start-ups. Today, Indian-origin executives lead major companies like Google, Microsoft, and IBM, while Indian doctors constitute nearly 6% of the physician workforce in the US.
Indians have consistently dominated the H-1B program, accounting for over 70% of recipients in recent years, with China trailing at about 12%. Particularly in the tech sector, the presence of Indian nationals is significant; a 2015 Freedom of Information Act request revealed that over 80% of computer jobs went to Indian nationals, a percentage that has remained largely unchanged.
The stakes are particularly high in the medical sector. In 2023, over 8,200 H-1B visas were granted for roles in general medicine and surgical hospitals. India remains the largest single source of international medical graduates, representing approximately 22% of all international doctors in the US. Given that international doctors account for up to a quarter of US physicians, Indian H-1B holders likely represent around 5-6% of this total workforce.
Experts have raised concerns about the viability of Trump's new $100,000 fee. In 2023, the median salary for new H-1B employees was around $94,000, which is below the proposed fee. Since the fee targets new hires, many will struggle to cover this significant cost, leading to potential labor shortages rather than immediate disruptions in the workforce.
While India may feel the initial shock from this decision, the ripple effects could be profound within the US. Indian outsourcing giants like TCS and Infosys have already been preparing for such scenarios by building local workforces and shifting operations offshore. Data reveals a notable trend: while Indians still account for 70% of H-1B recipients, only three of the top ten H-1B employers were connected to India in 2023, a decrease from six in 2016. This trend highlights the growing detachment of Indian companies from reliance on US-based skilled labor.
The IT sector in India, valued at $283 billion, faces a critical juncture due to its dependency on sending skilled workers to the US, which constitutes over half of its revenue. The industry body Nasscom has warned that the increased visa fees could disrupt business continuity for certain onshore projects, leading clients to reassess their agreements and possibly push for project delays. Companies may also reconsider their staffing strategies, opting to offshore more work, reduce onshore roles, and become increasingly selective in their sponsorship decisions.
Furthermore, Indian firms may pass the increased visa costs onto their US clients, according to Aditya Narayan Mishra of CIEL HR, a leading staffing firm. As a result, employers may become more hesitant to commit to the hefty sponsorship costs, increasing reliance on remote contracting and gig workers.
The broader implications for the US economy could be severe. The healthcare industry may struggle with doctor shortages, universities could find it challenging to attract STEM students, and start-ups lacking the lobbying power of tech giants like Google and Amazon may face significant obstacles. This visa fee hike could compel US companies to fundamentally alter their hiring practices and offshore considerable portions of their work. Additionally, it may restrict the ability of founders and CEOs to manage US-based businesses, potentially stifling innovation and competitiveness in the US market.
The anxiety surrounding the fee hike is particularly pronounced among Indian students, who constitute one in four international students in the US. Sudhanshu Kaushik, founder of the North American Association of Indian Students, representing 25,000 members across 120 universities, expressed that the timing of this announcement—just after September enrollments—has left many new arrivals in disbelief. He described it as a direct attack on their ambitions, noting the substantial sunk costs incurred by students, ranging from $50,000 to $100,000—costs that now seem wasted with the most promising route to entering the American workforce effectively closed off.
The full extent of the impact from this visa fee hike remains uncertain. Immigration lawyers anticipate that Trump's directive may face legal challenges shortly. Experts like Guerra predict that the fallout could be uneven, suggesting that some significant H-1B users, such as Amazon, Apple, Google, and Meta, might find ways to be exempt from the new fee policy. If these companies receive exemptions, it could undermine the intended purpose of the fee.
As the situation unfolds, the shake-up of the H-1B program appears to be less of a straightforward tax on foreign workers and more of a stress test for US companies and the economy. H-1B visa holders and their families contribute approximately $86 billion annually to the US economy, including $24 billion in federal payroll taxes and $11 billion in state and local taxes. How companies respond to this evolving landscape will be pivotal in determining whether the US maintains its leadership in innovation and talent or cedes ground to more accommodating economies.
