The US government has implemented a substantial increase in the application fee for H-1B visas, now amounting to approximately 88 lakh rupees (equivalent to one lakh US dollars) annually. In response to this, the Director of IIT-Madras, Kamakoti V.G., expressed gratitude towards former US President Donald Trump, viewing the change as a positive development and an opportunity to be capitalized upon.
The fee hike follows the signing of the bill at the White House by President Trump. Prior to this, the average cost for an H-1B visa was around 6 lakh rupees, valid for a three-year period, with the possibility of renewal for another three years upon payment. The new fee structure means that the total cost of an H-1B visa in the US will be approximately 5.28 crore rupees over a six-year period.
Addressing the implications of the H-1B fee increase, Kamakoti Veenathan noted a two-fold effect. Firstly, students who previously sought opportunities abroad may now remain in India, a development he welcomes as the Director of IIT-Madras, where he believes there are excellent research prospects. He suggested this could be a pivotal moment for students to contribute within the country. He pointed out that only a small percentage (5%) of IIT-Madras students have been outside India in the last five years, indicating a decline in the appeal of going to America.
Reports suggest that the fee increase could significantly impact the operational structures of domestic IT companies, potentially prompting them to reconsider new H-1B applications in favor of alternative strategies like offshore outsourcing or local hiring. Financial consultancy Motilal Oswal Financial Services estimates that a company applying for 5,000 H-1B visas after the implementation of the decision in 2027 would face a fee burden of 500 million dollars.
Consulting firms predict that Indian IT companies might avoid new H-1B applications due to the increased fees. This may encourage them to focus on either expanding offshore operations or employing local talent. Offshore supply chains refer to providing services to American companies through professionals based in India or other countries with lower labor costs.
While this shift could lead to a decrease in revenue from on-site operations in the US, it might also reduce the costs associated with on-site employees for these companies. Consequently, although the revenue from the American market might decrease for Indian IT companies, the overall operating margins could potentially improve due to reduced on-site costs.