The US has implemented a new fee structure for H-1B visas, with an annual application fee of approximately 88 lakh rupees (equivalent to $100,000). V.G. Kamakoti, the Director of IIT-Madras, has responded positively to the increase, stating that former US President Trump deserves appreciation for the move. He sees it as a positive development, to be taken advantage of.
The fee increase was signed into effect by President Trump. Previously, an H-1B visa cost around 6 lakh rupees and was valid for three years. It could then be renewed for another three years upon payment. Under the new structure, the total cost for an H-1B visa in the US could reach approximately 5.28 crore rupees over a six-year period.
Discussing the impact, Kamakoti Veenathan pointed out that there would be a two-fold effect. Firstly, students who were planning to work in the US might choose to remain in India. He, as Director of IIT-Madras, sees this as a positive outcome, as he believes India has great research opportunities. He suggests this is the ideal time for students who desire to work in the US to make contributions in India. He noted that only 5% of IIT-Madras’s population had been outside India in the last five years, showing a decreased interest in going to the US.
Reports suggest that the fee increase might significantly affect the business models of domestic IT firms. It might cause them to avoid new H-1B applications, focusing instead on offshore supply or local hiring. A report by Motilal Oswal Financial Services, a financial consultant, suggests that a company applying for 5,000 H-1B visas after 2027 could incur a fee burden of $500 million.
Consulting firms predict that Indian IT companies may avoid new H-1B applications due to the increased fees. This may lead to a focus on increasing offshore supply or local hiring. Offshore supply involves delivering services to American firms via professionals based in India or other cost-effective countries.
While it might reduce revenue from on-site operations in the US, it could also decrease the costs associated with on-site employees for the companies. Therefore, although the US business revenue might decrease for Indian IT companies, their operating margins might improve because of reduced on-site costs.