The IT outsourcing and staffing sectors, which have long been targets of both parties, will suffer as a result of President Donald Trump's $100,000 price tag for new H-1B employees hired from outside the US.
The IT outsourcing and staffing sectors, which have long been targets of both parties, will suffer as a result of President Donald Trump's $100,000 price tag for new H-1B employees hired from outside the US.
The charge is the largest hindrance to hiring competent foreign workers that the Trump administration has put in place thus far.
According to a Bloomberg News research, it will disproportionately affect international staffing agencies that serve as intermediaries for businesses looking to hire H-1B workers. Tata Consultancy Services Ltd., Infosys Ltd., and Cognizant Technology Solutions Corp. are some of these intermediaries.
Between May 2020 and May 2024, US consulates accepted over 90% of those three corporations' new H-1B hires. If the fee had been in place, the workers would have cost each of them hundreds of millions extra.
According to the Bloomberg study, over 93% of new Infosys H-1B hiring over that period—up to 10,400 workers—would have been subject to the $100,000 fee, totaling over a billion dollars in visa fees.
During that time, Tata would have been required to pay the fee for 6,500 workers, or 82% of newly approved H-1B workers. More than 5,600 workers, or 89% of new H-1B hires, will be charged to Cognizant.
Industry watchers anticipate a sharp decline in the demand for visas and an increase in the number of workers placed abroad, even if legal challenges are successful in swiftly blocking the cost.
Immigration lawyer Jonathan Wasden, who represents numerous IT companies, stated, "We're already seeing that happen." "The concern is that those who possess truly exceptional talent abroad will undoubtedly miss out."
Leading H-1B Companies
The H-1B program, which is the main route to US employment for foreign workers with at least a bachelor's degree, has historically been dominated by large IT and IT companies. The majority of the 85,000 visa spots that are available each year are claimed by them.
Although H-1B employees must be paid a "prevailing wage" for their field and early-career H-1B workers often earn much above the US median wage, both Republican and Democratic lawmakers have alleged that businesses use the program as a cheap alternative to American workers.
According to data collected by Bloomberg News, roughly four out of ten new H-1B hires allowed over the previous four years were foreign workers rather than recent international graduates of US institutions already in the country.
Fee Charges
In 2020, Trump administration established an online lottery method that allowed IT businesses to register H-1B workers for a little price without submitting a comprehensive petition. In fiscal 2024, there were more than 758,000 qualified registrations due to the rapid growth of entries.
Before the lottery was redesigned last year, DHS officials under President Joe Biden blamed the surge in entries on IT consultants manipulating the system. Trump's $100,000 fine is an even harsher means of preventing those businesses from participating in the program.
In a statement, White House spokesperson Taylor Rogers said it will discourage businesses "from spamming the system and driving down wages" and provide American companies looking for highly trained labor with more confidence.
Separate challenges to the Trump charge have been brought by business associations and offshoring states, including one headed by the US Chamber of Commerce. In that case, a hearing on a motion to halt the fee or determine its legality is scheduled for this week.
Many firms are making changes to their hiring strategies without waiting to see how the lawsuit turns out.
According to Steve Hall, chief AI officer at Information Services Group Inc., a tech research business that counsels clients on IT outsourcing, the IT consulting industry has already reduced the number of new H-1Bs since 2024 and the charge will force more positions overseas.
According to him, over the next five years, US-based businesses will probably increase their investments in India, the country that produces the majority of H-1B workers.
"You have to go where the talent is if you want to access the best talent in the world," he stated.
Regarding how the charge may affect recruiting plans, the majority of the top ten H-1B employers declined to comment.
A representative for Infosys cited remarks made in October by CEO Salil Parekh, who stated that a small percentage of the company's US employees need sponsorship in order to work. According to Parekh, the business would keep working with customers "without any disruption to their services today and into the future."
According to spokesman Miki Carver, IBM Corp., which hired 88% of its H-1B employees from overseas, changed its stance on high-skilled immigration over time.
Carver stated, "Our focus remains on ensuring we have the right skills to meet clients' evolving needs."
Reduced Demand for Visas
Ron Hira, a political scientist at Howard University and opponent of the H-1B program, stated that while the cost was a positive start, companies will find a way to adjust. According to him, an early indicator of its success will be the visa lottery in April of next year.
Will that cohort have more skills and earn more money? That will be the initial indication, according to Hira.
According to Finn Reynolds, head of market research at the legal digital firm Lawfully, some of the largest H-1B businesses intend to forego registering employees in the lottery who would need to have their visas processed at consulates. He continued by saying that until the $100,000 cost is more guaranteed, this kind of hiring change will probably affect the entire sector.
Lawfully forecasts that these additional expenses, along with a proposed Trump lottery revamp, might result in a 30% to 50% decrease in lottery entries for the next year. According to Reynolds, companies will need to consider both the expense of the fee and the chances of employees in the reorganized selection process.
"The weighted-lottery rule and the Trump administration's $100,000 fee have created an entirely new set of incentives that will reshape market behavior in relation to the H-1B lottery," he stated.
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