New Delhi [India], September 25 (ANI): The US decision to impose a USD 100,000 fee on new H-1B visas for foreign workers will cut just 10–20 basis points from the operating margins of Indian information technology (IT) services companies next fiscal, with the pass-through estimated at 30–70 percent, according to a Crisil Intelligence press release.
These companies, which had operating margins of about 22 percent last fiscal year, are likely to share the incremental cost with their clients.
“The pass-through is estimated at 30–70 percent. 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 percent, leading firms to expand offshore delivery, open nearshore centres and hire locally in the US, even though the denial rate eased to three percent in 2024,” the release said.
Citing the U.S. Citizenship and Immigration Services (USCIS), the release noted that between 2017 and 2025, 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, marking a negative compound annual growth rate of nine percent.
According to the USCIS, between October 2023 and September 2024, a total of 34,507 H-1B visas were issued for four IT companies, which account for about 50 percent of the industry’s revenue. Of this, 35 percent was for initial employment and 65 percent for continuing employment. The share of initial employment is expected to decline over the medium term.
“For the current fiscal year, there will be no impact as the H-1B requirements will have been fulfilled by now. The visa fee directive, effective from September 21, 2025, excludes existing H-1B visa holders and renewals,” the release noted.
India’s IT services industry is expected to earn USD 143–145 billion this fiscal, marking revenue growth of 2–4 percent over the last fiscal year. Next fiscal, growth is expected to be marginal or flat.
Employee costs accounted for 55–57 percent of the sales of India’s IT companies in the last fiscal year, while visa expenses totalled 0.02–0.05 percent of the total employee cost, with H-1B visa fees ranging between USD 2,000 and USD 5,000 per person.
The release stated, “About 35 percent of the approved H-1B applications from October 2023 to September 2024 were for initial employment. If this share remains constant next fiscal, the new fee structure could crank up the visa cost to about 1.0 percent of total employee cost. If the share is reduced, visa-related costs are expected to remain between 0.3–0.6 percent of the total employee cost.”
Tier-I IT companies, such as TCS, Infosys, Wipro, and HCL, generate 96 percent of their revenue from international markets, with the US alone accounting for about 53 percent. Last fiscal year, the industry exported USD 119 billion in services, reflecting its significant scale in global outsourcing.
India remained the top recipient of remittances at USD 118.7 billion in fiscal 2024, about 23 percent of that coming from the US. The visa fee hike is likely to reduce both the inflows and the US share over the medium term.
The report said that the visa fee hike is expected to accelerate offshoring and deter students from considering higher studies in the US. (ANI)
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