Trump's $100,000 H-1B visa fee rattles tech industry

The Trump administration's decision to impose a $100,000 fee for H-1B visas has raised significant concerns within the tech sector, leading companies to advise employees on H-1B visas to remain in the U.S.

India is the largest beneficiary of H-1B visas, holding 71% of the total, predominantly for STEM professionals, with companies like Amazon frequently obtaining the most approvals.

Analysts predict that the new visa fee may lead to decreased use of H-1B visas by companies, raising competition for local candidates and forcing tech firms to offer higher salaries to retain talent amidst potential workforce shortages.

The announcement has already affected stock prices of major Indian tech firms and has sparked debate about its implications for innovation and economic stability in the tech industry, with some experts warning it could severely hinder the H-1B program and broader economic growth.

Recommendation Rating: Significant Concerns for the Tech Sector

The recent decision by the Trump administration to impose a substantial application fee of $100,000 for H-1B visas has sent shockwaves through the technology industry. Major companies are now advising their employees who hold these visas to remain in the United States.

India has emerged as the primary benefactor of H-1B visas, comprising 71% of the total visa holders in the U.S. in the previous year. The majority of these visas are allocated to professionals in STEM fields, with Amazon consistently receiving the highest number of H-1B approvals annually since 2020.

Financial services firm Jefferies described the new fee as a "curveball" for the Indian IT sector, projecting that companies may curtail their use of H-1B visas due to the significant financial burden it imposes on businesses, diminishing the earnings before interest and taxes (EBIT) generated per employee during the visa period.

Jefferies further emphasized that, "The H-1B fee will constrain the supply of talent within the U.S., which will subsequently increase the demand for local candidates and green card holders. IT companies will need to offer higher wages to compete, or risk losing their workforce."

This announcement had immediate repercussions on the stock market, with leading Indian tech firms seeing declines: Tata Consultancy Services (TCS) dropped by 3%, Infosys fell by 2.6%, and Wipro decreased by 2.1%.

When introducing the new fee, the White House referenced a 2017 study stating that the wages of American computer scientists have been adversely affected by the influx of foreign workers since the 1990s. However, it omitted other significant findings from the same study regarding the positive impacts on IT industry profits, innovation, and efficiency. Furthermore, a 2015 analysis indicated that the arrival of foreign workers actually contributed to wage increases for American-born employees.

David Bier, the director of immigration studies at the Cato Institute, expressed strong concerns, arguing that the fee would essentially lead to the termination of the H-1B program. He warned that "This change could push many leading tech firms out of the U.S., diminish demand for local workers, stifle innovation, and produce severe indirect economic consequences, ultimately reducing the supply of goods and services across a range of industries, including IT, education, manufacturing, and healthcare."