The US government's decision to impose a $1 million fee on new H‑1B visas for foreign workers will likely reduce the operating margins of Indian IT services companies by 10 to 20 basis points
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NEW DELH — The US government's decision to impose a $1 million fee on new H‑1B visas for foreign workers will likely reduce the operating margins of Indian IT services companies by only 10 to 20 basis points next fiscal year, with firms likely passing some costs to clients, a report said on Thursday.
India’s leading IT exporters, with operating margins of around 22 per cent last fiscal year, are expected to pass on 30 to 70 per cent of the incremental costs to customers, a report from research firm Crisil Intelligence said.
India’s IT services industry is expected to reel in $143-145 billion this fiscal year, marking a revenue growth of 2-4 per cent over last fiscal year, followed by a year of marginal or flat growth, the report said.
The US government clarified that the directive, effective September 21, 2025, does not apply to current H1B holders or renewals, minimising its immediate effect.
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The reliance of IT companies on H-1B visas has been decreasing over the past few years as firms expanded offshore delivery, opened nearshore centres, and hired locally in the US.
The number of Indian employees on H-1B visas working for TCS, Infosys, Wipro and HCL Technologies almost halved from 34,507 to 17,997, between 2017 and 2025, according to government data.
Employee cost accounted for 55-57 per cent of sales of India’s IT companies last fiscal year, while visa expenses totalled 0.02 per cent-0.05 per cent of the total employee cost, with H1-B visa fees ranging between $2,000 and $5,000 per person.
If the current trend in the job market prevails, the new fee structure could crank up visa cost to 1.0 per cent of total employee cost, ICRA projected.
Tier-1 IT companies such as TCS, Infosys, Wipro, and HCL generate 96 per cent of their revenue from international markets, with the US alone accounting for 53 per cent.
India remained the top recipient of remittances at $118.7 billion in fiscal 2024, about 23 per cent of that coming from the US.