The September 19 proclamation aims to restrict the ‘exploitation’ of H-1B visas to reduce labour costs through the use of foreign workers — like Indian IT employees — at the cost of US workers.
However, Indian IT companies with US business interests say they are not surprised by the decision.
Over the last decade, there have been multiple efforts in the US to regulate the use of the H-1B visas, which have forced Indian IT companies to equip themselves against such an eventuality.
H-1B changes: What is the way ahead for Indian IT companies?
Indian IT companies have been bracing for changes in US work visa policies for a while and have always indicated foreign visa policies as a possible area of risk to company performance.
Among the things that Indian IT firms have been doing in the US market is seeking fewer H-1B visas and employing more local talent. Companies are also automating jobs and trying innovative collaborative technologies to remain competitive in the US market.
“The H-1B visa system exists specifically because of the persistent shortage of highly-skilled domestic IT talent in the US, and NASSCOM member companies have and will continue to provide skilled talent and solutions to fill that gap and keep US companies competitive globally,” the National Association of Software and Service Companies (NASSCOM) stated earlier this year.
Following the order by US President Donald Trump, NASSCOM said in a statement that the $100,000 fee would “have ripple effects on America’s innovation ecosystem and the wider job economy” and that it would impact Indians on H-1B visas and India’s technology services companies.
“However, it is also important to note that India and India-centric companies have been steadily reducing their reliance on these visas through increased local hiring in recent years. These companies also follow all necessary governance and compliance in the US for H-1B processes, pay the prevailing wages and contribute to the local economy and innovation partnerships with academia and start-ups. The H-1B workers for these companies by no means are a threat to national security in the US,” the NASSCOM statement said.
Previous attempts to regulate H-1B visas
During Trump’s last term, there was speculation that he would issue an executive order titled ‘Protecting American Jobs and Workers by Strengthening the Integrity of Foreign Worker Visa Programmes’.
A leaked version of the proposed executive order in early 2017 caused worries in the Indian IT sector, which earns 60 per cent of its IT services revenues from the US market.
Other efforts to overcome the shortcomings in the H-1B system were through legislation — rather than through executive orders or proclamations, as seen in the Trump administrations.
In 2015, US politicians Charles Grassley and Dick Durbin proposed an H1-B and L-1 Visa Reform Act seeking to deny H-1B visas to firms having more than 50 employees if more than 50 per cent of such employees had work visas.
The H-1B and L-1 Visa Reform Act of 2016, introduced by Bill Pascrell and Dana Rohrabacher, also sought to prohibit companies from hiring H-1B employees if they employ more than 50 people and if more than 50 per cent of their employees are H-1B and L-1 visa holders.
In January 2017, two Republicans from California, Darell Issa and Scott Peters, introduced a Bill called the ‘Protect and Grow American Jobs Act’ in the US Congress to raise wages for high-skill jobs to $100,000 per year from $60,000, and to make master’s degrees mandatory to qualify to work with H-1B visas.
In February 2017, the High-Skilled Integrity and Fairness Act of 2017, introduced by Congresswoman Zoe Lofgren, prescribed, among other changes, a minimum wage of $130,000 for H-1B workers, instead of the $60,000 in existence since 1998, so that bringing in foreign workers would not be a cheaper way out for employers.
What was proposed in the Trump executive order in 2017?
Among the proposals were reportedly inspections of places employing foreign workers under the L-1 visa category and, later, of all workplaces employing foreign workers.
Proposals also included curbing visas granted for job training for those pursuing science, technology, engineering and mathematics master’s courses in US universities, and also barring work permits for the spouses of H1B visa holders.
What is the rationale behind the Trump proclamation to impose a fee for new H-1B visas?
According to the proclamation, “The H-1B nonimmigrant visa programme was created to bring temporary workers into the United States to perform additive, high-skilled functions, but it has been deliberately exploited to replace, rather than supplement, American workers with lower-paid, lower-skilled labour.”
“Information technology (IT) firms in particular have prominently manipulated the H-1B system, significantly harming American workers in computer-related fields,” the order says.
The share of IT workers in the H-1B programme grew from 32 per cent in 2003 to an average of over 65 per cent in the last five years, with the “most prolific H-1B employers” being IT outsourcing companies, the order states.
“Using these H-1B-reliant IT outsourcing companies provides significant savings for employers: one study of tech workers showed a 36 per cent discount for H-1B ‘entry-level’ positions as compared to full-time, traditional workers. To take advantage of artificially low labour costs incentivised by the programme, companies close their IT divisions, fire their American staff, and outsource IT jobs to lower-paid foreign workers,” it says.
The order cites examples of one software company that was approved for over 5,000 H-1B workers in FY 2025 announcing a layoff for more than 15,000 employees and a second firm approved for 1,700 H-1B workers “laying off 2,400 American workers in Oregon in July”.
“A third company has reduced its workforce by approximately 27,000 American workers since 2022, while being approved for over 25,000 H-1B workers since FY 2022,” the order says.
“American IT workers have reported they were forced to train the foreign workers who were taking their jobs and to sign non-disclosure agreements about this indignity as a condition of receiving any form of severance. This suggests H-1B visas are not being used to fill occupational shortages or obtain highly skilled workers who are unavailable in the United States,” the order states.
The September 19 proclamation aims to restrict the 'exploitation' of H-1B visas to reduce labour costs through the use of foreign workers. (Photo: Freepik) 
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