H1B Visas and the Indian impact
Starting from April 1, 2024, changes in visa costs have been implemented. The H1B application fee has surged by 70% from $460 to $780. The registration fee has skyrocketed by 2025% from $10 to $215. These costs are typically borne by the employers. An additional $600 is levied as an Asylum Program Fee. So, if an employer like Infosys or TCS is attempting to bring an Indian tech worker to the US, they will now have to shell out $1595 instead of the previous $470. The costs have surged by 3.4x, placing a significant financial burden on these employers.
Impact on the IT firms
Many IT firms in India entice their employees by promising offshore opportunities as part of their employment. The employees also usually prefer onsite opportunities because the pay is higher.
The substantial increase in visa costs will significantly impact the operations and financials of IT firms in India. Companies like Infosys, TCS, and Accenture, which often apply for a large number of visas to augment their workforce in the US, will now face a considerable increase in their operational costs. This could potentially affect their ability to compete in the US market and could lead to a shift in their business strategies.
However, it must be noted that other big tech companies like Google apply for visas on a case-to-case basis, and their applications are minimal compared to IT outsourcing firms.
The Indian Impact
Many Indians prefer to work for outsourcing companies because they offer the opportunity to obtain onsite (H1B) visas and then transfer their employment to the parent company, which provides the outsourced work. This allows them to leverage their H1B status for better salaries. However, the increase in visa costs will now impact the registration and application costs associated with this visa transfer process, potentially making it less attractive for Indian workers.
Another significant impact of the visa cost increase is the exacerbation of the Green Card backlog, a long-standing issue for H1B holders in the US. Many Indians are expressing their frustration with the lengthy and uncertain Green Card application process on social media. This has created a new demand for Visa consultants, who are now exploring alternative routes, such as the EB1 or EB5, to expedite the Green Card acquisition process.
The Indian IT services industry, already grappling with a significant economic downturn, now faces a new challenge with onsite Visas in the US, one of its key markets. The second impact could be a shift in preference among prospective employees, who may start favouring other firms over these IT companies due to reduced onsite opportunities. The salary gap for college graduates between IT outsourcing and other software firms is nearly 5x. A new college graduate could earn $4200 per year in an IT outsourcing firm, while the figure could rise to $20,000 in a software product firm. This potential talent drain could inadvertently impact the industry's ability to retain skilled professionals.
The IT federation has decided to challenge the price increase, but we must wait to see how that works.