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The American Dream may be shattered for Indian tech talent, but many welcome the brain-drain reversal.
– The Trump administration’s push to steeply hike fees for skilled worker visas to boost hiring of American locals could end up accelerating offshoring of technological services to India, where the majority of foreign tech workers in the US hail from.
US President Donald Trump’s latest executive order requires a one-time payment of US$100,000 (S$129,000) for all new H-1B visa applications . He is also mulling over ending the existing visa lottery, to replace it with a weighted system that favours higher-paid foreigners and keeps out younger, lower-tier professionals.
The H-1B is a non-immigrant visa for foreign workers in speciality occupations, sponsored by employers for those who hold bachelor’s or higher degrees. Nearly two-thirds of H-1B visas in 2024 went to skilled people in computer and management-consulting services, engineering, and scientific research, according to a recent US government report.
The dramatic increase in visa fees, from the previous US$2,000 to US$5,000 range, is meant to make it prohibitively expensive for employers to sponsor skilled foreign workers entering the US on the H-1B visa, amid a broader clampdown on immigration.
It will shake up t he Indian IT sector, which is strongly entwined with the US tech industry, providing outsourced services, collaborations and a steady flow of talent at all levels. The US accounts for 50 per cent of India’s software services exports, and the top five Indian IT firms derive roughly 55 per cent of their revenue from there.
As the dominant recipients of the H-1B, cornering 71 per cent of the 2024 approvals, Indians will be most affected by the changes. Costlier, volatile immigration policies under Mr Trump might force tech firms to sponsor fewer foreigners and hire locals instead, closing the door on the American dream for many Indian graduates and early-career workers.
But talented techies returning or staying home could also be a “blessing in disguise”, as some have called it, for the US$225 billion Indian IT sector. Instead of employing Indians in the US, tech firms might open offices overseas, including in India itself.
Boost for Indian tech
With global companies coming to India and the Indian technology market maturing in the past few years, “the talent is ready to make the move back”, said Mr Aabhinandan Chatterjee, co-founder of GCCX, which helps start-ups set up global offices.
A couple of years ago, as he helped establish India offices for British finance app Revolut, with 800 employees, and American health tech Tenor, also with a sizeable team, Mr Chatterjee found that “there was a lot of interest, even excitement, among Indian-origin professionals in the US to return to India”.
The Indian tech sector employs more than 5.8 million people, according to the industry body, the National Association of Software and Service Companies (Nasscom), concentrated in Bengaluru, Hyderabad, Chennai, Delhi NCR and Mumbai.
Remuneration remains a major consideration for returnees, but Mr Chatterjee said top-level managers tend to accept moving back to India for roughly 60 per cent of their American salary. “The cost of living is much lower here, more foreign companies are setting up, and there’s potential for growth.”
Mr Rajat Garg, founder of Indian healthcare portal myUpchar.com, agreed. “The silver lining is that start-ups like ours now will find it easier to access world-class engineers, product managers and healthcare specialists who might have otherwise left for the US.”
“Talented people will no longer need to uproot their families to work in cutting-edge innovation,” he added. Nor will they have to live “under constant stress and uncertainty” as they build a life around short-term visas.
Tech firm founders like Mr Kunal Bahl said the immigration tightening meant that “something bigger and better” was in store for Indians. On the day of Mr Trump’s visa fee announcement, Mr Bahl recalled on social media platform X how his H-1B visa application was rejected in 2007 when he was working for Microsoft.
“It was crushing and numbing at the moment, but life-changing eventually, when I moved back to India,” he said. Mr Bahl went on to co-found Snapdeal, which is today a leading e-commerce portal and a major investor in several of India’s top start-ups.
Specialist tech and artificial intelligence developers “in the deep end of technology are irreplaceable”, and US companies will absorb the one-time visa fee for them, said Mr Krishna Kumar Gowda, general secretary of the Greater Bengaluru IT Companies and Industries Association. But a significant number of IT contract workers and project managers would probably “be shipped back to India to work remotely”.
“Guess who benefits most from this rule? Developers of IT parks in India.”
Software service firms most affected
Before the expected bonanza, however, there will be a lot of upheaval.
The visa fee will likely end up affecting mega IT service companies and the India-born entry-level professionals they employ, often right out of American universities , said recruiters and employers .
The biggest recipients of H-1B visas include Amazon, Microsoft, Google and Meta, as well as Indian-origin multinationals such as Tata Consultancy Services (TCS), Cognizant, Infosys and Wipro.
Mr Vikram H.S., who runs a recruitment agency that supplies US-based candidates for IT and non-IT companies, said: “The annual pay for the majority of H-1B holders working for the likes of TCS and Cognizant is around US$100,000, which is actually entry-level professional pay.
“This is lower than what they would pay an American, and it is this model of cheap hiring that Trump’s administration sees as (short-changing) Americans.”
According to estimates by American brokerage firm Jefferies, H-1B holders accounted for between 2 per cent and 3.3 per cent of total employees in giant multinational tech firms in 2024.
H-1B applications for Indian candidates have already been on the decline in the past six years amid a tech sector slowdown in the US and increased AI adoption, on top of the processing delays and friction around hiring foreign workers.
In response, Indian companies operating in the US have significantly reduced their dependence on H-1B visas, steadily increased their local hiring, and leaned more heavily on offshore offices and global capability centres, said Nasscom.
H-1B visas issued to leading Indian companies fell from 14,792 in 2015, to 10,162 in 2024. This is not just because of shrinking visa approvals, but also because companies are filing fewer applications.
In 2016, the top six tech providers – TCS, TechM, Infosys, Wipro, HCLTech and LTIMindtree – received 8,473 approvals against 43,860 applications. In 2024, they received 7,105 approvals against 24,269 applications , according to Equirus Securities, a brokerage firm that tracks the tech sector .
Mid-sized firms and students to shift
Meanwhile, medium-sized tech firms and start-ups that have US offices might have to close them down, as they will not be able to absorb the new costs.
Based in New York, Mr Dhruvil Sanghvi, founder of IT services company LogiNext, said his US-registered company’s strategy has been to have half its staff on H-1B visas. Those in America are engaged in sales and customer relations, while its India office is the offshore software development centre, a common structure that companies from the Philippines and Israel also have in the US.
“The new visa fee will discourage all mid-sized companies like us,” Mr Sanghvi said, noting that the first-year cost of hiring someone on a US$100,000 annual salary is effectively doubled .
Such cost pressures come on top of other recent policies to dissuade outsourcing and hiring of foreign workers, he added.
Mr Trump’s Halting International Relocation of Employment Act proposes imposing a 25 per cent excise tax on direct payments American companies make to foreign workers. While American companies can deduct research and development expenses immediately in the US, offshore activities are subject to a 15-year amortisation requirement, delaying corporate tax savings.
“This means I can’t hire efficiently in the US and I can’t even hire outside the country without a huge cost,” Mr Sanghvi said.
Start-ups and smaller companies that already have “limited access to global talent” will face hiring and innovation challenges with fewer foreign workers available, which “likely will lead to slower product cycles” and resistance from investors for further rounds of funding, said Mr Akhil Choudhary, chief executive officer of Gurgaon-based IT services firm Vaco Binary Semantics. The survival of such start-ups will depend on their creativity in “compensating high-impact H-1B hires” with equity or other variables, and the “agility to pivot to new business models like setting up ‘any shore’ global teams”, he added.
Mr Sanghvi said the combined toll of restrictive immigration policies has accelerated the plans of several US-registered companies like his to move to Britain, the United Arab Emirates or Singapore in the next two to three years, leaving a skeletal team or contractors in the US to maintain a customer base.
Students and start-ups
The new visa rules will significantly hit students with an American postgraduate degree, particularly in science and technology, which have been the most sought-after by employers. In 2024, 37 per cent of all H-1B petitions approved for new hires were filed by foreign students in the US. In previous years, it has been around 45 per cent.
Indians are the largest group of international students in the US, with 75 per cent enrolled in science and technology courses. As entry-level H-1B jobs become costlier to secure, Indian students are less likely to make the cut.
The likely shrinking of work opportunities could also keep India’s top students at home, which is “a blessing in disguise”, said Dr Kamakoti Veezhinathan, director of the Indian Institute of Technology, Madras (IIT-M) .
“The students who go from here with an aspiration to work (in the US) might not go now... I am happy that they will continue (to contribute) in India,” Dr Veezhinathan told ANI, adding that in the past five years, only 5 per cent of IIT-M engineering graduates have gone abroad.
As many as a third of graduates from India’s 23 IITs migrate abroad, of which 65 per cent head to the US, a trend particularly pronounced among top-ranked students.
Mr Sanghvi said: “A big part of the American dream starts at universities – that’s where America gets its IT talent pool from. Even if there is no reverse brain drain now, the unwelcoming job market at the entry level will slow down the brain drain, as Indian students headed to the US might stay in India.”
Indian professionals and graduates are also looking beyond the US, to London, Tokyo, Dubai and Singapore. GCCX’s Mr Chatterjee said some European destinations such as Berlin, Paris, Spain, Portugal and Luxembourg “have also attracted global talent by making a tremendous effort to build English-speaking workplaces”.
A 30-year-old Indian banking tech professional, who has worked in Singapore for six years, had her H-1B visa approved only months ago. She is now reconsidering the move.
“The job in the US pays me three times more than my current pay here. But I don’t know if I want to take the risk of leaving everything in Singapore, where policies are stable, and going to the US with the higher cost of living and all this uncertainty,” she told ST, requesting anonymity.
“In the end, the effect of these crazy changes is that the US will chase away skilled people like me.”
[SRC] https://www.straitstimes.com/asia/south-asia/india-tech-sees-silver-lining-in-donald-trumps-h-1b-visa-overhaul
