Disorientation, panic, and then a sudden change of mind by the White House–the weekend was a roller coaster for hundreds of thousands of Indians on H-1B visas.
On Friday, U.S. President Donald Trump shocked the technology world with an announcement that, if implemented, would increase the cost of work permits for skilled workers by up to 50 times. To $100,000. Chaos ensued: outside the country, Silicon Valley businesses advised employees not to travel, staff scrambled for flights, and immigration lawyers worked around the clock to unravel the general meaning of the order.
By Saturday, the White House sought to calm tempers, ruling that the fees applied only to new applicants–and that it was a one-off thing. Nonetheless, the much-criticized H-1B program continues to face an uncertain future.
Even with that compromise, the policy effectively shuts down the H-1B channel that, for three decades, fueled the American dream of millions of Indians and, more importantly than that, supplied the lifeblood of talent to US industries.
This pipeline didn’t just change America’s demographics. For India, the H-1B turned out to be a provider of desire: software developers from small towns turned into American earners, whole families were vaulted into middle-class prosperity, and industries that had never thought of it–from airlines to real estate–found themselves with a new class of globe-trotting Indians as customers.
On the American side, it meant a flood of talent that filled labs, classrooms, hospitals, and startups. Today, Indians run Google, Microsoft, and IBM, while nearly six percent of America’s doctor workforce is Indian.
Indians dominate the H-1B program, with more than 70% of recent years ‘recipients being of Indian descent. (China was the second-largest source, with about 12% of beneficiaries.)
The technology field provides an even starker example: according to an FOIA request in 2015, over 80% of “computer” jobs went to Indian nationals. And that share, industry experts say, hasn’t changed much.
The medical community reflects the seriousness of the situation. In 2023, over 8,200 H-1Bs were approved to work in general medicine and surgical hospitals.
India is the single most significant source of international medical graduates (who tend to be on H-1B visas) and now makes up about 22% of American doctors. Since international doctors account for up to one quarter of United States physicians, Indian H-1B holders likely account for 5 to 6% of the entire United States medical workforce.
Experts say pay data shows that the new $100,000 fee proposed by Trump is unworkable. In 2023, new H-1B employees’ median salary was only $94,000 compared to $129,000 for those already in the system. As the fee only targets new hires, most will not even earn enough to cover it, says experts.
“The latest White House directive determines that the fee will only be levied on new H-1B recipients. There is therefore a good chance (of immediate disruption) that such a fee will have medium- to long-term repercussions instead,” Gil Guerra, an immigration policy analyst at the Niskanen Center, told the BBC.
India may bear the burden first, but for the United States, there are ripple effects. Middlemen giant TCS and Infosys have long anticipated such a turn by hiring more US workers and moving their work offshore.
The figures tell the tale: although Indians still make up 70% of H-1B recipients, only three of the top ten H-1B employers in 2023 were related to Indian companies. This was down from six in 2016, according to Pew Research.
India’s IT industry, worth around $283bn, faces a moment of truth: Over half its earnings come from sending skilled workers to the US.
The visa fee increase “is going to disturb the continuing operations of certain projects,” says IT industry body Nasscom. Clients are likely to push for a renegotiation or delay business until legal uncertainties are resolved. In contrast, businesses may rethink their employment models–sending operations offshore, cutting roles at home, and becoming much pickier about sponsors.
Indian firms may also charge their US customers more to cover in part visa costs, says Aditya Narayan Mishra of CIEL HR, a leading staffing firm. “With companies unwilling to shoulder the risk of sponsorship, we may see more flexible employment relations–remote contracts, delivery overseas and work as a gig worker,” he said.
Its impact on the US as a whole could be severe: Hospitals with a doctor shortage will hit one side, while universities lacking the clout in Washington of Google or Amazon on the other, and start-ups that don’t even have this sort of heavyweight backing.
“It will force American companies to drastically alter their hiring practices and outsource an enormous quantity of their work. It will also deny the founders, CEOs and managers of companies in America,” David Bier, director of immigration studies at Cato, told BBC. This would be a mortal blow to innovation and competitiveness in the USA.
It’s a mood that is reflected in some of the comments from others. “The demand for new workers in areas such as technology, medicine [in US] is expected to increase (even though not in evenly proportions), and in view of how specialized and essential those areas are, if there’s a shortage for just a couple of years, it could really affect the American economy and people.”
‘It will encourage highly qualified Indian students to look at international study in other countries as well, and this, too should have an impact on the American university system.’
The immediate effect will be on Indian students, who make up one quarter of all international students at US colleges and universities.
Sudhanshu Kaushik, the founder of the North American Association of Indian Students, which has 25,000 members from 120 universities across the country, said the timing – just after the September intake – has shocked many freshly arrived students.
‘To us, it felt like a direct attack. Those fees are already paid. So there is an enormous sunk cost of anything from $50,000 to $100,000 per student – and the most lucrative way of entering the American workforce has now been blown to smithereens.’ Mr Kaushik told the BBC.
He predicts this latest ruling will cut back the number of Indian students going to American universities next year as people move elsewhere to “lay down permanent roots”.
What is certain is that the full impact of the tax hike has yet to be felt.
Immigration lawyers expect that legal challenges to Trump’s move will be immediately forthcoming. Guerra warns that the consequences could be uneven: “I anticipate that Trump’s new H-1B policy will have a lot of negative effects on America, but it’s going to take time to see what exactly those are.”
It’s all in the details, says Vanlager Nayak: ‘For instance, since the executive order allows exceptions in certain cases, it might be possible for some heavy H1b users like Amazon, Apple, Google and Meta to find exemptions with respect to the H1b fee policy. But if they all get exceptions, then the effect of the fee would in practice be minimal. ‘
For $125,000 or more in application, rolling over your visa contract every year seems out of the question. So it’s not for everyone, despite America’s offer of employment to these 85,000 annually from their home countries. In large part as a result of Harvard research, we now know that on average, for the first 11 years after his initial arrival, a knowledge immigrant yields about $500,000 extra to everyone around him but himself.
On social programs, death visa holders pay about $425 million annually in federal payroll taxes alone, so they’re directly injecting raw cash into America’s production and consumption — or government.
It’s a big but credible question: when this model works for everyone, not in their own national interest or favor, will it continue to exist? As the dust settles, the H-1B shake-up looks less like a tax on foreign workers and more like a stress test for US companies – and the economy. H-1B visa holders and their families contribute roughly $86bn annually to the US economy, including $24bn in federal payroll taxes and $11bn in state and local taxes.
We must ask all companies how they respond because it will be one or another future that hangs in the balance.
