Changes in H-1B visa fees by the United States have had a more profound impact on Indian IT companies compared to their American rivals. On September 19, President Donald Trump announced that each new H-1B visa application would now incur a fee of $100,000 (approximately 83 lakh Indian Rupees), while this decision primarily affects India, as 71% of all H-1B visas issued last year went to Indian nationals. The new fee is expected to hit IT companies hard, regardless of their origin.
Challenges for Indian Companies and Silicon Valley's Silence
The core reason for this differential impact lies in the wage statistics of H-1B employees. The average annual salary for H-1B employees at TCS is $78,000, while at Infosys, it stands at $71,000. In contrast, Amazon's H-1B employees earn an average of $143,000, and Microsoft's earn $141,000. This means the new $100,000 fee represents roughly double the proportion of the average Indian company's H-1B employee salary compared to their American counterparts, while this directly impacts the profitability of Indian firms, leading to a decline in their stock values. Following the announcement, TCS shares fell by 8. 9% and Infosys by 6. 1% within a week, while Amazon and Microsoft experienced smaller dips.
This period presents significant challenges for Indian IT companies heavily reliant on H-1B visas. The evolving US policy appears to favor companies offering higher wages, and the $100,000 fee is seen as a first step in this direction. Interestingly, American tech giants have not opposed this fee hike. This is likely because H-1B visas are allocated through a lottery system. If the increased cost discourages Indian companies from applying, it statistically increases the. Chances for American companies to secure visas, thereby ensuring access to a skilled workforce.
Potential for Domestic Job Creation and TCS's Strategy
One potential positive outcome of this situation could be increased domestic hiring by Indian IT companies. Positions that become harder to fill via H-1B visas might now be filled by local talent within India. If companies successfully adapt their business models to this new reality, their stock prices could rebound, making the current dip a potential opportunity for investors. Tata Consultancy Services (TCS)'s HR head stated that the company's business model can easily adapt to the H-1B visa changes, as the IT giant is already increasing its local workforce in the US and has Importantly reduced its reliance on H-1B visas, with only about 500 employees currently working on such visas in the US.
