Indian IT services companies are set to benefit from potential reforms to the H-1B visa policy, despite holding a relatively small share of total visa sponsorships, according to a recent report by Macquarie Research. The study highlights the pivotal role of H-1B visas in addressing the technical talent gap in the United States, where hiring local talent remains a significant challenge.
The report raised concerns over proposals to establish a flat wage floor for H-1B visa holders, labelling them as impractical given the substantial regional differences in cost of living across the US. “The wage floor must account for local conditions to avoid unintended consequences,” Macquarie stated, cautioning that a uniform wage could worsen economic disparities.
As an alternative, Macquarie suggested transforming the H-1B visa into a temporary, non-employer-specific work permit, akin to Norway’s skilled work permit system. This approach, the report argued, would promote flexibility, foster competition and safeguard worker rights.
An analysis of H-1B visa issuance for the 2024 fiscal year (October 2023 to September 2024) revealed that over 61,000 firms collectively accounted for 79.6% of the visas. The highest sponsorship by a single company was Amazon, with 3,871 visas (2.7% of the total). Leading Indian IT firms such as Tata Consultancy Services Ltd. (TCS) and HCL Technologies Ltd. sponsored 1,452 visas (1.0%) and 1,266 visas (0.9%), respectively.
India’s IT services industry, a cornerstone of the nation’s economy, remains closely linked with the US market for both talent and revenue. However, uncertainty has been introduced by the return of Donald Trump as US President in January, raising questions about his administration’s approach to immigration and outsourcing policies.
While stricter visa policies could pose hurdles for Indian professionals, they might also bolster the offshoring model. Experts predict a potential resurgence of opportunities returning to India, similar to the outsourcing boom of the 1990s and 2000s. With modern infrastructure, a larger skilled workforce and improved communication networks, India is better equipped to capitalise on such shifts than ever before.
CareEdge Ratings has emphasised the risks associated with changes to the H-1B visa system, warning that disruptions to talent mobility could harm the outsourcing-reliant Indian IT sector. “Indians receive the highest number of work visas from the United States, mainly for the IT sector,” the report noted, underlining the critical importance of these visas for sustaining industry operations and revenue streams.
The dependence of Indian IT firms on H-1B visas stems from the scarcity of local technical talent in the US. In November 2024, the unemployment rate for professional and technical services in the US stood at just 2.9%, underscoring the challenges of sourcing talent locally.
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