Trump’s H-1B Visa Chaos to Create ‘New World Order’ on Services

US President Donald Trump’s latest move to scuttle the H-1B visa programme has triggered chaos and confusion across global technology supply chains, but experts say it has the potential to reshape how the IT services industry operates.

Trump imposed a $100,000 fee for new H-1B visas starting Sunday (Sept 21), confirming fears of services exports being dragged into his administration’s mercurial trade policies.

While specifics around how it will be implemented are still unclear, it is still set to trigger profound change for technology firms — especially those in India and the US.

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For India — the largest beneficiary of H-1B visas last year — the resulting chaos could fuel the growth of a potentially $100 billion market for global capability centres (GCCs), industry watchers say.

India is already home to more than half of the world’s GCCs — centres once seen as low-cost offshore back offices that have now evolved into global companies supporting their parent organisations in multiple functions, including daily operations, finance, research and development.

Last year, a report by IT industry body Nasscom and consulting firm Zinnov said India was projected to host GCCs of more than 2,200 companies by 2030, with a market size nearing $100 billion and generating up to 2.8 million jobs.

Trump’s latest shake-up to the H1-B process could accelerate that move. Silicon Valley-based Constellation Research founder and chairman Ray Wang told Reuters that Trump’s latest moves will lead more global firms to set up GCCs in India even as they increase local hiring in the US.

“We are seeing a new world order on services economics,” Wang said.

The growth of GCCs in India has been driven primarily by the scale and quality of the talent pool, given the country’s status as one of the oldest offshoring ecosystems globally, experts have previously said.

That has meant an increasing number of global firms are basing leadership roles in India. According to the Nasscom survey, the numbers of such roles are expected to balloon to more than 30,000 by 2023, from the current 6,500.

With the new H-1B fee in effect, GCCs in India will “rise with broader capabilities and skills as enterprises shift strategic roles to India,” Steven Hall, president and chief AI officer at IT advisory firm ISG, told Reuters.

Increased offshoring

Stifel analysts made similar remarks in a note saying the rules would increase how much of their work companies base offshore.

“We expect the IT services companies will likely increase the ratio of offshore content if the policy persists. Currently, 70-80% of work in these models is performed offshore, though we believe this ratio could migrate to 90% (offshore)/10% (onshore) over time,” they said.

Ganesh Natarajan, former CEO of IT outsourcer Zensar Technologies, also told Reuters he expected firms to restrict cross-border travel and get more work done out of countries such as India, Mexico and the Philippines.

ISG’s Hall also noted that “time zone proximity” will also “accelerate GCCs and resourcing in Canada, Mexico, and Latin America, where talent is stable and cost advantages remain.”

Baird analyst Colin Sebastian said that while the new fee “will cost larger companies such as Amazon, Google and Meta hundreds of millions, or even billions of dollars, the more likely unintended consequences of the new policy could be to starve emerging and small US businesses of qualified workers.”

It will also push “some companies to shift research and engineering centers to locations such as Toronto, London and Bangalore,” he added.

India IT forced to reshape operations

Meanwhile, Arthur Hogan, chief market strategist at B Riley Wealth Management, said he did not see the visa fee hike driving a movement of offshoring. “It would only move prices higher, much like the trade and tariff policy has,” he said.

India’s $283 billion information technology sector will also have to overhaul its decades-old strategy of rotating skilled talent into US projects.

The sector, which earns about 57% of its total revenue from the US market, has long gained from US work visa programmes and the outsourcing of software and business services — a contentious issue for many Americans who have lost jobs to cheaper workers in India.

But new rules would force Indian IT firms like Tata Consultancy Services, Infosys, HCLTech, Wipro and Tech Mahindra to pause onshore rotations, accelerate offshore delivery, and ramp up hiring of US citizens and green-card holders, experts said.

On Monday, Mumbai-listed shares of the firms all slumped between 2-3%. Shares of their US clients such as Apple, JPMorgan Chase, Walmart, Microsoft, Meta and Alphabet’s Google also fell in early US trade but recovered quickly.

Chaos and confusion

Meanwhile, industry body Nasscom said the move would “potentially have ripple effects on America’s innovation ecosystem” and disrupt business continuity for onshore projects.

US technology executives and investors have largely been critical of the new fee. Some say the crackdown on high-skilled immigrants would worsen brain drain and weigh on US productivity. Others say the fee would add millions of dollars in costs for companies and disproportionately hurt startups, which may not be able to afford visas as part of their strategy.

“While the H-1B applies to less than 1% of the American workforce, it’s a segment that punches above its weight when it comes to driving innovation,” Derren Nathan, head of equity research at Hargreaves Lansdown told Reuters.

Emkay global chief economist Madhavi Arora also noted that by disrupting the IT sector’s onsite-offshore model, new visa rules will pressure margins and supply chains.

Most industry watchers expect Trump’s move to constrain client-facing roles, hurting IT deal conversion and extending the time taken to scale up tech projects.

“Clients will demand repricing or delay start dates until there is clarity on legal challenges. Some projects will be re-scoped to reduce onshore staffing. Others will shift delivery offshore or near-shore from day one,” HFS Research CEO Phil Fersht said.

Bernstein analysts noted that the impact on company resources will lead American companies to accelerate the use of Generative AI/agentic AI to limit the potential salary increase due to scarcity of IT resources.

Legal challenge imminent

Meanwhile, immigration lawyers, who received frantic calls over the weekend due to the chaos and confusion created by Trump’s Friday announcement said the new visa fee was steep.

“We expect that companies will become far more selective in deciding which candidates to sponsor, reserving H-1B filings for only the most business-critical roles,” Vic Goel, managing partner at US law firm Goel & Anderson, told Reuters.

“This would significantly reduce access to the H-1B programme for many skilled foreign nationals and could reshape employer demand.”

Many immigration lawyers also expect Trump’s move to be challenged legally soon.

“We are anticipating that several lawsuits will be immediately forthcoming this week,” Alcorn Immigration Law CEO Sophie Alcorn said.

• Reuters, with additional editing and inputs from Vishakha Saxena

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Vishakha Saxena

Vishakha Saxena is the Multimedia and Social Media Editor at Asia Financial. She has worked as a digital journalist since 2013, and is an experienced writer and multimedia producer. As a trader and investor, she is keenly interested in new economy, emerging markets and the intersections of finance and society. You can write to her at [email protected]