President Donald Trump’s $100,000 price tag for new H-1B workers hired from outside the U.S. will have punishing effects for the IT outsourcing and staffing industries that have long been a target of both parties.

The fee is the biggest restriction the Trump administration has imposed so far on employment of skilled foreign workers.

A Bloomberg News analysis found it will have a disproportionate impact on multinational staffing firms that act as middlemen for companies seeking H-1B workers. Those middlemen include Tata Consultancy Services Ltd., Infosys Ltd., and Cognizant Technology Solutions Corp.

Almost 90% of new H-1B hires at those three companies between May 2020 and May 2024 were approved at U.S. consulates. The workers would have cost each of them hundreds of millions more if the fee had been in effect.

More than 93% of new Infosys H-1B hires in that timeframe — upwards of 10,400 workers — would have been hit with the $100,000 fee, according to the Bloomberg analysis, adding up to more than a billion dollars in visa charges.

Tata would have had to pay the fee for 6,500 workers over that period, or 82% of newly approved H-1B workers. Cognizant would be faced with the charge for more than 5,600 employees, or 89% of new H-1B hires.

Even if legal challenges are successful in quickly blocking the fee, industry observers expect it will to lead to a steep drop in visa demand and drive placement of more workers overseas.

“We’re already seeing that happen,” said immigration attorney Jonathan Wasden, who represents many IT employers. “The fear is that if you have truly exceptional talent overseas, those people are definitely going to be missing out.”

Dominant H-1B firms

Large tech and IT firms have traditionally dominated the H-1B program, the primary pathway to U.S. careers for foreign workers with at least a bachelor’s degree. They claim most of the 85,000 visa slots available each year.

Both Republican and Democratic lawmakers have claimed that companies use the program as a cheap alternative to American workers, although H-1B employees must be paid a “prevailing wage” for their industry and early-career H-1B workers typically garner well above the U.S. median wage.

Workers from outside the U.S., rather than recent international graduates of U.S. colleges already in the country, accounted for more than four out of 10 new H-1B hires approved over the past four years, according to data analyzed by Bloomberg News.

Fee burdens

IT employers took advantage of an online lottery process set up by Trump officials in 2020, allowing them to register H-1B workers for a low fee and without a detailed petition. The number of entries grew at breakneck speed, topping 758,000 eligible registrations in fiscal 2024.

DHS officials under President Joe Biden attributed the skyrocketing entries to IT consultants gaming the system before revamping the lottery last year. Trump’s $100,000 fee is an even more punishing tool to block those companies from the program.

White House spokeswoman Taylor Rogers said in a statement it will give American businesses seeking high-skilled workers more certainty and discourage companies “from spamming the system and driving down wages.”

Offshoring

States and business groups have filed separate challenges to the Trump fee, including one led by the U.S. Chamber of Commerce. A hearing is set for this week in that case on a motion to block the fee or rule on its lawfulness.

Many employers aren’t waiting to see how litigation plays out before adjusting their hiring plans.

The IT consulting industry had already pulled back on new H-1Bs since 2024 and the fee will push more jobs overseas, said Steve Hall, chief AI officer at Information Services Group Inc., a tech research firm that advises clients on IT outsourcing.

U.S.-based corporations will likely boost investments in India, the source of most H-1B workers, over the next half decade, he said.

“If you want to access the world’s best talent, you have to go where the talent is,” he said.

Most of the 10 biggest H-1B employers declined to comment on how the fee will shape hiring plans.

An Infosys spokesman highlighted October comments from CEO Salil Parekh, who said that a minority of the company’s U.S. workforce requires sponsorship for employment. The company’s work with clients will continue “without any disruption to their services today and into the future,” Parekh said.

IBM Corp., which hired 88% of its H-1B workers from abroad, said it shifted its approach to high-skilled immigration over time, according to spokesperson Miki Carver.

“Our focus remains on ensuring we have the right skills to meet clients’ evolving needs,” Carver said.

Dampening visa demand

The fee was a step in the right direction, but employers will figure out how to adapt, said Ron Hira, a political scientist at Howard University and critic of the H-1B program. The visa lottery next April will be an early measure of its success, he said.

“Will that be a higher skill, higher wage cohort? That’ll be the first sign,” Hira said.

Some of the biggest H-1B employers plan to opt out of registering workers in the lottery who would require visa processing at consulates, said Finn Reynolds, director of market research at legal tech startup Lawfully. He added that such a hiring shift will likely be industry-wide until there’s more certainty on the $100,000 fee.

Those new costs — combined with a proposed Trump lottery overhaul — could drive down entries in next year’s lottery by anywhere from 30% to 50%, Lawfully projects. Businesses will have to weigh the costs of the fee and workers’ odds in the restructured selection process, Reynolds said.

“The Trump administration’s $100,000 fee, combined with the weighted-lottery rule, has created an entirely new set of incentives that will reshape market behavior vis-a-vis the H-1B lottery,” he said.

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