Project Firewall: US visa crackdown puts Indian IT in the crosshairs

Launched by the US Department of Labour, Project Firewall stipulates launching investigations against employers to maximize H-1B programme compliance. The Secretary of Labor, according to the department’s statement, will personally certify the initiation of investigations, which is a first for the department.

“The language in such provisions typically grants wide discretion to the US Government to initiate litigation or enforcement actions, especially where national interest, security, or public policy concerns are cited," said Rohitaashv Sinha, partner, King Stubb & Kasiva, Advocates and Attorneys.

Foreign firms must be mindful that these powers can be exercised not just against US entities but also against overseas companies with US touchpoints—whether through contracts, clients, data processing, or capital market presence, Sinha said. This includes Indian IT firms operating in the US and American multinational companies that employ Indian professionals under the H-1B visa programme.

New Delhi-based lawyer Russell A. Stamets, a partner at Circle of Counsels, said that Project Firewall will almost certainly target small and large Indian IT companies and US companies that employ H-1B professionals directly.

There have been documented incidents of H-1B abuse in the past and allegations of racism in hiring and firing practices by Indian IT companies, he said. Project Firewall is likely to amplify long-standing criticism of the H-1B programme and the conduct of specific companies, he said.

“Indian IT companies are ripe targets for such litigation. The overwhelming majority of their employees are ethnic Indians, even in the US, and a lack of meaningful diversity makes them a presumptive target," Stamets said. “All Asian tech companies have the same potential issue.

He added that Indian companies face the risk of whistle-blower liability, too. Anyone who helps cover up during an investigation will be criminally liable, even if no underlying wrongdoing is found.

The drafting of the rules appeared deliberately open-ended, according to Sinha, which could allow regulators or courts to interpret it expansively.

The real risk for Indian IT firms is a retroactive application of the rules, he said. The US Government may revisit past recruitments, visa use, or business practices using the new standards.

“The uncertainty itself can lead to more litigation opportunities, as companies may find themselves defending actions taken years earlier under today’s broadened framework," he said.

Stamets concurred. “Past practices and current practices are certainly in the sights of US prosecutors under this administration. Indian companies need to bulk up on counsel with US capacity now, but carefully," he said.

However, at least one expert said that the rules appear prospective in nature. “This seems to be more of a go-forward action," said Ray Wang, founder of Constellation Research, a technology research and advisory firm, adding that "IT services firms better have good records, in the case they (US Dept) look backwards."

New H-1B visa rules

Project Firewall comes after US President Donald Trump on Friday signed an executive order that requires companies to pay a one-time fee of $100,000 for every foreign worker brought under the new H-1B visa regime. Non-US citizens on H-1B visas can work in America for up to three years, which can be extended for up to six years.

According to Phil Fersht, chief executive officer of US-based HfS Research, an outsourcing-research firm, “The Department of Labor is sending a very strong signal that the US wants foreign IT firms to stop leaning so heavily on the H1B program and start investing more in American workers."

“Project Firewall is both symbolic and practical. Symbolic, because it puts the Secretary of Labor directly in the approval chain for investigations, which is unprecedented. Practical, because it will increase audits, oversight, and penalties for firms that abuse the program or fail to demonstrate they are prioritising local hiring," said Fersht.

“With the Secretary personally certifying investigations, you can expect higher-profile cases to move forward quickly. This raises the likelihood of new litigation, particularly against Indian IT firms that remain heavily dependent on H1B staffing for US delivery," said Fersht. “Even if a firm is fully compliant, the increased scrutiny means more disruption, higher compliance costs, and reputational risk."

India’s six largest information technology services firms including Tata Consultancy Services Ltd, Infosys Ltd and HCL Technologies Ltd, sent between 0.5-1% of their workforces to the US under the H-1B visa programme in 2025 alone. The ratio is higher for smaller firms.

The number of H-1B visas sponsored by Indian IT firms in the US this year is the lowest since 2009, when the US Citizenship and Immigration Services started disclosing this data. The number of engineers sent by the largest IT services firms peaked in 2017.

Even then, Indian IT firms cumulatively sponsor tens of thousands of H-1B visas.

At the time of signing the order, a close aide to Trump and US Secretary of Commerce Howard Lutnick mentioned that the revised visa fee of $100,000 will be paid by companies annually and will also apply to H-1B visa renewals. However, on Saturday, White House Press Secretary Karoline Leavitt clarified in a statement that the new visa fees were a one-time charge applicable only to new H-1B applications.