In the short term, President Donald Trump’s bombshell decision to impose an additional $100,000 annual cost on new H-1B work visa applications to the US may feel like a punch in the gut for Indian IT professionals. However, over the longer term, it could trigger a third wave of technological transformation in India.

The new policy, announced on September 19, came as a complete surprise and sent waves of stress and panic through hundreds of thousands of H-1B visa holders, their families, and their employers. This anxiety is especially acute given that over 70% of H-1B recipients are young Indian tech graduates who have long viewed the program as a gateway to prosperity, professional advancement, and the possibility of living in the United States.

It is undeniable that the proposed increase has effectively upended how these work permits have historically been issued over the past two and a half decades. During that period, by some estimates, the U.S. government has earned upwards of $200 billion directly through processing and other fees—plus significantly more via the income taxes paid by these professionals. The economic spinoff resulting from the arrival of these tech families—through their spending in local economies across various states—also runs into several hundred billion dollars. Since a large number of these professionals return to India after their six-year work permits expire, the Social Security contributions they made, but will never claim, remain with the U.S. government by default.

Understanding the Real Cost of H-1B Visas 

The base H-1B filing fee is $460 or $780, depending on the size of the employer. The additional fees—which vary by employer size and are meant to fund other U.S. programs—can include:

• Up to $750/$1500: American Competitiveness and Workforce Improvement Act (ACWIA) fee to fund training of U.S. workers
• $4,000: Fee to fund U.S. border protection
• $300/$600: Fee to fund the U.S. asylum program
• $500: Anti-fraud fee
• $2,805: Premium processing fee

For a large company, the base fee of $780, combined with these add-ons, can total up to $10,185 per application. In the case of H-1B transfers, subsequent employers are required to pay these fees all over again.

In addition, employers must contribute roughly $20,000 annually per H-1B employee toward Social Security, along with Medicare (2.9%–3.8%) and federal/state unemployment insurance. The latter is particularly contentious, as H-1B employees are required to leave the U.S. if they lose their jobs, meaning they can’t claim unemployment benefits—despite paying into the system.

Debunking the Displacement Myth

One of the most common arguments against H-1B visas is that foreign workers displace U.S.-born workers. However, numerous studies have consistently debunked this claim:

• National Foundation for American Policy (NFAP): Found that H-1B workers complement—not displace—U.S. workers, leading to job creation. Each H-1B visa requested was associated with an additional 1.83 jobs created for U.S. workers, on average.
• National Bureau of Economic Research (NBER): Found that skilled immigrants, including H-1B holders, improve productivity, innovation, and job creation.
• Brookings Institution: Emphasized the role of H-1B workers in entrepreneurship, economic growth, and job creation.
• American Enterprise Institute (AEI): Reported that high-skilled immigrants have a positive impact on wages and employment opportunities for U.S. workers, especially in STEM fields.

A Third Tech Transformation for India?

Despite the obvious benefits to the U.S. economy, if the $100,000 annual fee becomes permanent, India could see its third major tech transformation—an unintended but powerful consequence.

• First Wave: During the Y2K era and shortly after 2001, India emerged as the hub for call centers, providing a considerable economic boost.
• Second Wave: Following the reduction of the H-1B cap from 195,000 to 65,000 post-9/11, U.S. companies began outsourcing software development and high-end work to India, creating a robust offshore delivery model.
• Third Wave (Potential): In response to the latest fee hike and growing barriers, companies may shift even more operations to India. CEOs who once raced to promise President Trump hundreds of billions in U.S. investment may begin reallocating those funds abroad. The anticipated shortage of Indian and Chinese tech professionals in the U.S. could drive companies to expand operations in India to access the talent pool locally.

Additionally, many global companies that currently route work through U.S.-based entities employing Indian tech professionals may begin partnering directly with Indian firms—bypassing the U.S. entirely.

After H-1B fee hikes and tariffs, outsourcing itself could become the next target. Should that occur, projects previously funneled through U.S. intermediaries may shift directly to Indian companies. Without the need for work visas, Indian tech professionals working from India would eliminate many bureaucratic hurdles—potentially reshaping the global tech services landscape.

A Call to Return

Indian Prime Minister Narendra Modi has already called on Indian professionals in the U.S. to return and help revitalize the domestic tech sector. However, this would require a significant shift in mindset—both at the government and corporate levels. Many of these professionals have grown accustomed to American workplace practices, which may not yet be fully mirrored in India.

While the new H-1B fee represents a very real and immediate hardship—both financially and emotionally—for thousands of Indian families, it could also present a long-term opportunity for India’s tech sector. If Indian companies and the government can adapt quickly, and if U.S. companies continue to rely on Indian talent (albeit remotely), this moment could be a catalyst for transformation.

There’s no doubt about the human cost involved. But over the next five to ten years, the prospects look promising—if India’s tech industry can reinvent itself in tandem with evolving global dynamics.

(The author is an Indian American well-known attorney and CPA based in Silicon Valley, US.)