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On September 19, President Donald Trump announced that every new H-1B visa application will now be subject to a fee of $100,000 (approximately ₹8.3 million). India is the most affected country by this decision, as 71% of all H-1B visas issued last year were granted to Indians. This fee will have the greatest impact on IT companies, both Indian and American.
This announcement harmed both Indian and American tech companies. According to a media report, two major Indian IT companies, TCS and Infosys, were the most affected. In just one week after the fee was announced, TCS’s shares fell 8.9% and Infosys’s 6.1%. Two major US tech companies, Amazon and Microsoft, also use H-1B visas extensively. Following the fee announcement, Amazon’s shares fell 4.9% and Microsoft’s 1.4%. The question is why the impact on American companies was less?
Salary Disparity
The salary data for H-1B employees helps explain this difference. The average annual salary of H-1B employees at TCS is $78,000. The average salary for Infosys employees is $71,000. Meanwhile, Amazon employees earn an average of $143,000 and Microsoft employees $141,000. This means that the fee is almost twice as high as the salary of employees at Indian companies. This fee significantly impacts the profits of Indian companies.
Difficult Times for Indian Companies
The coming times look challenging for Indian IT companies dependent on H-1B visas. US policy now appears to be shifting towards granting visas to companies that pay higher salaries. This new $100,000 fee is seen as the first step in that direction.
Silicon Valley’s Strategic Silence
It’s noteworthy that American tech companies did not oppose this fee because H-1B visas are awarded through a lottery system. If this fee discourages Indian companies from applying, it increases the likelihood of American companies receiving visas.
Will this increase jobs in India?
One positive aspect of this could be that Indian IT companies will now hire more people within the country. H-1B visas that are no longer available could be replaced by domestic workers. If companies adapt their business models to this change, their shares could rebound, and the current decline could prove to be a good opportunity for investors.
What steps will companies take?
Meanwhile, the HR head of Tata Consultancy Services (TCS) said in a statement that the company’s business model can easily adapt to the changes in H-1B visas, as the IT giant is now increasing its local workforce in the US. He added that the company has significantly reduced its reliance on H-1B visas for its operations in the US. Currently, only about 500 employees are working in the US on H-1B visas.
