After Trump’s shock move, companies may pass 30–70% of H-1B visa fee hike to clients, says Crisil
Increase in H-1B visa fees to $100,000 is projected to have a minimal effect on Indian IT companies, as operating margins will fall slightly. However, these companies plan to pass on costs to their clients, while the reliance on H-1B visas continues to decline, influencing future hiring strategies
The Trump administration's decision to increase the H-1B visa fee to $100,000 for foreign workers will have only a minimal impact on the operating margins of Indian information technology (IT) services companies in the next fiscal year. The new fee, effective September 21, 2025, is estimated to trim operating margins by just 10-20 basis points from last year's level of around 22 per cent.
The increased cost is also not expected to be fully absorbed by the IT companies. Instead, they will likely share it with their clients, with a pass-through rate estimated at 30-70 per cent. As per a Crisil Intelligence press release, this cost-sharing arrangement will help offset the financial impact on companies' profitability.
Declining reliance on H-1B visas
The press release also noted that between 2017 and 2025, the number of Indian employees on H-1B visas working for companies like TCS, Infosys, Wipro, and HCL Technologies almost halved, from 34,507 to 17,997, marking a negative compound annual growth rate of nine per cent.
“The reliance of IT companies on H-1B visas has been decreasing over the past few years. The trend began in 2018 when the denial rate increased to 24 per cent, leading firms to expand offshore delivery, open nearshore centres and hire locally in the US, even though the denial rate eased to three per cent in 2024,” the release said.
The impact of the visa fee hike won't be reflected in the current fiscal year, as the H1-B requirements will have been fulfilled by now. It also excludes existing H1B visa holders and renewals.
Visa cost and employee expenses
Currently, visa expenses make up a very small portion of total employee costs, ranging from 0.02 to 0.05 per cent, with H-1 B visa fees ranging between $2,000 and $5,000 per person. However, the new fee structure could force companies to spend more.
The release stated that about 35 per cent of the approved H-1B applications from October 2023 to September 2024 were for initial employment. If this share remains constant in the next fiscal year, then visa costs could rise to about 1 per cent of total employee costs; however, if this share decreases, the costs are expected to stay between 0.3 and 0.6 per cent.
Impact on the revenue of the companies
India's IT services industry is projected to see a modest revenue growth of 2-4 per cent this fiscal, reaching $143-145 billion. Growth is expected to be only marginal or flat in the next fiscal year, according to a ANI report.
Several IT giants, such as TCS, Infosys, Wipro, and HCL, generate 96 per cent of their revenue from international markets, with the US alone contributing 53 per cent, it said.
The new visa fee is also anticipated to affect remittances, as around 23 per cent of India's $118.7 billion in fiscal 2024 remittances came from the US. The visa fee hike is likely to reduce both the inflows and the US share over the medium term.
Furthermore, it may accelerate offshoring and deter students from pursuing higher studies in the US.