Representative image showing H-1B visa application
Credit: iStock Photo
Bengaluru: Indian IT services companies may steer clear of new H-1B filings from next fiscal year as these companies need to spend $1,00,000 per petition.
Motilal Oswal Financial Services in its 'Technology' sector update, released on Sunday said visa applications for FY26 are already locked in and that the $100k fee will start to impact from FY27 onwards.
"If an IT company were to apply for 5,000 H-1Bs in FY27, the annual fee alone would amount to $500 million (5,000 × $100k). Given the magnitude of this fee, it is likely that Indian IT companies will avoid new H-1B filings altogether, opting instead to expand offshore delivery or increase local hiring," the report said.
It added that big tech companies such as Google, Amazon, Microsoft and Meta account for a larger share of fresh H-1B applications than Indian IT companies.
Indian IT services firms have been reducing their reliance on H-1B visas from FY21. From 11,212 H-1B visa applications, the country's largest IT services firm Tata Consultancy Services (TCS) has reduced its reliance to 7,844 in FY24. Infosys too reduced its dependence on H-1B visas from 15,853 applications to a little over 8,200 in FY24. From 5,092 applications in FY20, Wipro reduced it to 1,694 in FY24.
"If new H-1Bs vanish, on-site revenues will decline, but so do on-site costs. This shift could improve operating margins, as offshore work tends to be structurally more profitable," said Motilal Oswal in its report.
It added that only 20 per cent of employees are currently based on-site and of this, 20–30 per cent are on H-1B visas. This means H-1B holders represent only 3–5 per cent of the active workforce for a typical vendor.
During the Q3 FY25 earnings press conference in January this year, top IT companies said their dependency on H-1B is limited.
Infosys CFO Jayesh Sanghrajka had said that over the years, the company's dependence on H-1B visas has reduced significantly.
He had said that the company's onsite mix reduced significantly. Earlier it used to be in the 30 per cent range but the range is now at about 24 per cent. "Within that, our near shore has increased significantly," he said.
In 2021, Nasscom and S&P Global in a report stated that the Indian tech industry has employed 207,000 people in the US with an average wage of $106,360.
Though the $100k fee applies only to new peitions, and not to techies living and working in the US, it has created widespread panic and frustration among them.
Lavanya A, a techie in California, said that they are clueless with no clarity. "I thought about switching companies but I won’t do that now and we need to wait to seek more clarity," she said.
Meanwhile, the White House released a fact sheet saying that the share of IT workers with H-1B visas has risen from 32 per cent in FY 2003 to over 65 per cent in recent years. It said American companies are laying off their American technology workers and seemingly replacing them with H-1B workers. It pointed out that one company was approved for 5,189 H-1B workers in FY 2025, while laying off roughly 16,000 US employees this year.