TCS, Infosys, and Wipro scramble to adjust strategies as the exorbitant visa levy puts their traditional onsite delivery model at risk
The technology sector in India is bracing for a significant financial shock following the US administration’s decision to impose a $100,000 fee on new H-1B petitions. Industry giants like Tata Consultancy Services (TCS), Infosys, and Wipro built their empires on the ability to deploy skilled engineers to client sites in America. However, this massive levy effectively renders that traditional “land and expand” model unviable for junior and mid-level roles. Analysts predict that the Indian IT H-1B fee impact will be visible immediately in the upcoming quarterly guidance, with margins expected to contract if costs are not passed on.
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The End of Cost Arbitrage?
For decades, the competitive advantage of Indian firms was cost arbitrage. They offered high-quality talent at a fraction of US wages. This new fee structure destroys that math for a large segment of the workforce. Sending an engineer with a salary of $80,000 now comes with a $100,000 entry ticket, which doubles the first-year cost. Consequently, companies will likely stop sending employees with less than ten years of experience. The Indian IT H-1B fee impact forces firms to restrict visa applications only for senior architects or specialised domain experts whose billing rates can justify the premium.
Accelerating Localisation and Nearshoring
In response, IT majors are rapidly accelerating their localisation strategies. Companies have already been hiring locally in the US to mitigate immigration risks, but this policy turns a gradual shift into an emergency mandate. We can expect a surge in recruitment at US delivery centres in Texas, Ohio, and North Carolina. Additionally, firms will look to “nearshore” locations like Mexico and Canada. These countries operate in the same time zones as US clients but do not carry the burden of the Indian IT H-1B fee impact, making them attractive alternatives for onsite proximity.
Automation as the Ultimate Counter
This regulatory hurdle aligns perfectly with the industry’s push into Agentic AI. Since moving people is now prohibitively expensive, moving the work to autonomous digital agents becomes the only logical solution. Service providers will aggressively pitch “outcomes” rather than “headcount”. Instead of sending five engineers to manage a server in New York, they will deploy one AI agent managed remotely from Bengaluru. Therefore, the Indian IT H-1B fee impact might inadvertently catalyse the fastest technological upgrade in the history of the sector, pushing Indian firms up the value chain.
The Hinge Point
While the fee is framed as a protectionist move, it actually exposes the Indian IT sector’s lingering dependency on visa policy. The real story is not the cost, but the exposure. Despite years of talking about “de-risking”, the top tier firms still derive over 50 per cent of their revenue from North America. The Indian IT H-1B fee impact reveals that the “global delivery model” was always fragile. This moment forces a permanent decoupling of revenue growth from headcount growth. It marks the final death of the “body shop” tag and the forced birth of true multinational consultancy structures.