How Will The $100,000 H-1B Visa Fee Reshape Indian IT Companies’ U.S. Dependence?
Mphasis, a mid-tier IT services provider with over 80% of its revenues coming from the U.S., represents one of the Indian IT companies most directly impacted by the recent changes in the H-1B visa fee structure. Like its larger peers—Infosys, TCS, Wipro, and HCLTech—Mphasis delivers a significant portion of its services to U.S.-based clients, but its higher relative reliance on the U.S. market means regulatory changes carry a magnified effect. The jump in visa costs from $995 per petition to $100,000 per year fundamentally changes the economics of deploying Indian employees onsite.
From $995 To $100,000: The Cost Transformation
While the intent behind the policy is to encourage local hiring in the U.S., the immediate effect is a hit to operating margins, particularly for firms with high onsite headcount. Companies like Sagility (100% revenue from U.S.) and Birlasoft (86% U.S. revenue) face steeper risks compared to peers with more diversified revenue bases.
Indian IT Companies’ U.S. Revenue Dependence
- Sagility – 100%
- Birlasoft – 86%
- Mphasis – 82%
- Persistent – 79%
- LTIMindtree – 73%
- Zensar Tech – 67%
- HCL Tech – 66%
- FSL – 66%
- Wipro – 62%
- Infosys – 60%
- L&T Tech – 55%
- Tech Mahindra – 52%
- TCS – 51%
- Coforge – 50%
This table highlights how mid-cap IT firms are more exposed than industry leaders like TCS and Infosys. For companies above 70% U.S. dependence, even a modest number of H-1B employees could meaningfully erode profitability.
Short-Term Margin Pressure
Companies are responding by accelerating local hiring in the U.S. While this reduces visa dependence, it simultaneously raises labor costs, as U.S. wages are significantly higher than offshore wages in India. Thus, the shift is not cost-neutral and may weigh on earnings in the medium term.
Long-Term Adaptation: Offshore Advantage
Past disruptions such as the Y2K crisis, global financial slowdown, and digital transformation waves have shown that Indian IT adapts quickly to external shocks. While H-1B changes introduce short-term headwinds, the long-term growth trajectory of the sector remains intact due to India’s large skilled talent base and cost advantage.
Investor Perspective: Selective Approach Needed
While FIIs have pulled back following the H-1B announcement, long-term investors may consider accumulating large-cap IT firms like TCS, Infosys, and HCLTech on dips. Mid-caps with concentrated U.S. exposure face higher uncertainty and should be approached with caution until clarity emerges on visa policy implementation.
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Investor Takeaway
The increase in H-1B visa costs from $995 to $100,000 per year poses immediate challenges to Indian IT companies, particularly mid-tier players with high U.S. revenue dependence. While margins are likely to be squeezed in the short run, the industry’s ability to adapt through offshoring, automation, and local hiring ensures resilience. Investors should adopt a selective approach, favoring companies with diversified revenue bases and strong digital offerings.
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SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
