H-1B Fee: IT Exporters in India Brace for Costs, Not Crisis

A sweeping change in United States immigration policy under President Donald Trump — including a steep increase in H-1B visa application fees to $100,000 and a weighted selection process — is expected to reshape the global technology workforce landscape. While the move may increase operating costs and slow growth in India’s services exports, a new Moody’s Ratings report suggests that the long-term Trump H-1B Visa Fee Impact on the Indian IT Sector is likely to remain limited for large technology firms.

The report underscores a complex reality: although Indian IT companies rely heavily on the H-1B visa programme to deploy skilled professionals to US client sites, their strong financial health, global scale and the persistent shortage of technology talent in the US are expected to cushion the impact.

H-1B Fee: Immigration Tightening Raises Costs but Not Alarm

According to Moody’s, US immigration policy changes will inevitably push up expenses for India’s IT services providers, which account for nearly 80% of the country’s services exports. However, the expected increase in operating costs — estimated between $100 million and $250 million if companies maintain current H-1B usage levels — would represent only about 1% of revenues for major players.

Companies such as Tata Consultancy Services (TCS), Infosys, Wipro and HCL Technologies are among the world’s largest IT service providers. With EBITA margins ranging from 19% to 26%, significantly higher than global peers’ 10% to 17%, they are well-positioned to absorb incremental costs without major disruptions.

Moody’s further noted that even under the full cost burden scenario, margins may decline by roughly 100 basis points — still leaving Indian IT companies more profitable than many international competitors.

Why Indian IT Companies Depend on H-1B Visas

The US computer-related technology sector accounts for nearly 70% of H-1B visas issued over the past five years, making it the largest consumer of the programme. Indian companies dominate the sponsor list, with TCS, Infosys, HCL Tech, Wipro, Tech Mahindra, LTIMindtree and Mphasis regularly ranking among the top users.

The operational model is straightforward: highly skilled engineers and developers are deployed from offshore hubs in India to client locations in the US to manage projects, implement solutions and oversee digital transformation initiatives. This model has allowed Indian IT companies to scale globally while delivering cost-effective services.

However, Moody’s cautions that smaller and mid-sized firms may struggle more than industry giants to absorb rising visa costs and adapt to policy shifts.

H-1B Fee: Services Exports: Growth Story Faces New Headwinds

India’s services exports have grown at a compound annual growth rate (CAGR) of about 12% between fiscal years 2016-17 and 2024-25, now accounting for nearly half of the country’s total exports. Technology-related services — including telecommunications, computer and information services — along with business services like research and development and consulting, together make up nearly 80% of total services exports.

While the Trump H-1B Visa Fee Impact on Indian IT Sector could temporarily slow export growth in the US market, Moody’s believes the broader global demand for IT talent will prevent a significant downturn.

Exports of software services reached $204.7 billion in fiscal year 2024-25, growing by 7.3%, according to data cited by the Reserve Bank of India. Importantly, on-site services — those most affected by visa rules — account for only about 10% of total software exports, limiting overall exposure.

Strategic Shifts Already Underway

Indian IT companies have already begun adjusting their strategies to reduce reliance on visa-dependent models. Local hiring in the United States has increased significantly, while nearshoring and the expansion of global capability centres (GCCs) in India and other regions are gaining traction.

Europe is also emerging as a crucial growth market. The share of Indian software exports to Europe has risen to 33% from 23% in fiscal year 2016-17, while the US share has declined from about 60% to 53%. Meanwhile, on-site service delivery has fallen from 17.2% to 9.3% of total software exports over the same period — evidence of a gradual shift toward remote and offshore delivery models.

A recently announced India-EU free trade agreement is expected to further diversify export markets and reduce dependence on US immigration policies.

Talent Gap in the US Remains India’s Biggest Advantage

Perhaps the strongest buffer against the Trump H-1B Visa Fee Impact on the Indian IT Sector is the persistent shortage of skilled workers in the US. Moody’s points to demographic trends — declining birth rates and an ageing population — as key drivers of future labour shortages.

The US computer and information technology sector is projected to create around 300,000 job openings annually through 2034, largely due to digitalisation and artificial intelligence adoption. Yet only about 100,000 computer science graduates with US citizenship or permanent residency enter the workforce each year, leaving a gap of roughly 200,000 positions annually.

India’s massive talent pipeline — producing approximately 2.5 million STEM graduates each year compared with around 850,000 in the US — places the country in a unique position to meet this demand. Indian nationals already account for 70% to 75% of all H-1B visas issued since 2020.