New visa rules shatter the American dream for many Indians
INDIAN aerospace engineering student Sudhanva Kashyap thought he had mapped out everything it would take to get to the United States, only to have his plans upended by Washington’s sudden and expensive change to its skilled worker visas.
Friday’s changes to the prized H-1B visas, which included a new US$100,000 fee, rattled the tech industry and left US companies scrambling to figure out the implications.
Hasty clarifications from the White House that the new charge would be a one-off payment rather than the annual fee announced by US Commerce Secretary Howard Lutnick on Friday only added to the uncertainty.
The fee change rattled students like Kashyap, who hoped to get into an American university and from there the US jobs market.
Kashyap, a 21-year-old from the southern Indian tech hub of Bengaluru, had pictured himself going to a top-tier American university, with Stanford his goal.
“Back when the fee was lower, it was still something that you could pin hopes on, it would be easier to convert the student visa to an H-1B,” Kashyap told AFP.
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“I am very disappointed... my main dream is derailed as things stand now,” he said.
H-1B visas allow companies to sponsor foreign workers with specialised skills - such as scientists, engineers, and computer programmers - to work in the United States, initially for three years but extendable to six.
The United States awards 85,000 H-1B visas per year on a lottery system, with India accounting for around three-quarters of the recipients.
India was by far the largest beneficiary of H-1B visas last year, accounting for 71 per cent of approved beneficiaries, while China was a distant second at 11.7 per cent, according to US government data.
Lutnick detailed the new measure as he stood beside Donald Trump in the Oval Office, where the US president also introduced a US$1 million “gold card” residency programme he had previewed months earlier.
Several leading companies quickly advised their employees holding H-1B visas not to leave the country while they figured out the implications. Some who had already boarded planes disembarked for fear they might not be allowed to re-enter.
The American dream
Data released by the US Department of Homeland Security showed there were 422,335 Indian students in the United States in 2024, an increase of 11.8 per cent on the year before.
India’s IT industry association Nasscom said soon after Friday’s initial announcement that it was concerned by the new visa measures.
It said “business continuity” at technology companies would be disrupted, and was quick to point out how Indian IT firms contributed to the US economy and were “by no means” a security threat.
Shashwath VS, a 20-year-old chemical engineering student in Bengaluru, said the new fee was too high for companies to think about sponsoring a foreign candidate.
“I will now explore other countries... going to the US was a priority for me, but not anymore,” Shashwath said.
He said many like him might try to find places elsewhere, such as Germany, the Netherlands and the United Kingdom.
Indians, he said, “contribute significantly to the American economy - be it students who go there or people who work there”.
“So they (the US) will also be hit, in one way or the other.”
Immigration crackdown
Trump has had the H-1B programme in his sights since his first term in office, and the current visa iteration has become the latest move in a major immigration crackdown in his second term.
Silicon Valley companies rely on Indian workers who either relocate to the United States or come and go between the two countries.
India’s own vast outsourcing industry has also depended on the work permits for decades, even though that has softened in recent years.
Industry leader Tata Consultancy Services alone received approval for more than 5,000 H-1B visas in the first half of the 2025 fiscal year.
Sahil, a 37-year-old senior manager at an India-based consultancy firm, returned from the United States last year after living there on an H-1B visa for almost seven years.
“I can tell every second or third person in the IT sector dreams of settling in the US or visiting to work,” he said.
“We will see fewer Indians migrating to the US in the future. That possibly means those people will now start looking at other countries.”
The sector, which earns about 57 per cent of its total revenue from the US market, has long gained from US work visa programs and the outsourcing of software and business services - a contentious issue for many Americans who have lost jobs to cheaper workers in India.
Trump’s move to reshape the H-1B programme will force IT firms with clients such as Apple, JPMorgan Chase, Walmart, Microsoft, Meta and Alphabet’s Google to pause onshore rotations, accelerate offshore delivery, and ramp up hiring of US citizens and green card holders, experts said.
“The ‘American Dream’ for aspiring workers will be tough,” Ganesh Natarajan, former CEO of IT outsourcer Zensar Technologies, said, adding that he expected firms to restrict cross-border travel and get more work done out of countries such as India, Mexico and the Philippines.
IT firms Tata Consultancy Services, Infosys , HCLTech, Wipro and Tech Mahindra did not respond to Reuters’ requests seeking comment.
Nasscom said the move would “potentially have ripple effects on America’s innovation ecosystem” and disrupt business continuity for onshore projects.
“Services exports have finally been dragged into the ongoing global trade and tech war,” Emkay Global chief economist Madhavi Arora said, adding that it could disrupt the IT sector’s onsite-offshore model, pressuring margins and supply chain.
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.
Future H1-B visas for critical roles only
Immigration lawyers, who received frantic calls over the weekend due to the chaos and confusion created by Trump’s proclamation, in which he accused the IT sector of manipulating the H-1B system, 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 said. “This would significantly reduce access to the H-1B programme for many skilled foreign nationals and could reshape employer demand.”
Many immigration lawyers 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.
The fresh challenge for the Indian IT sector comes as it awaits clarity on a proposed 25 per cent tax on outsourcing payments and struggles with weak revenue growth in its mainstay US market as clients defer non-essential tech spending amid inflationary pressures and tariff uncertainty.
Move to propel GCC growth
Across the board, industry watchers expect Trump’s move to accelerate the growth of US firms’ global capability centres (GCCs), which have evolved from low-cost offshore back offices to high-value innovation hubs that support operations, finance, research and development.
“Time zone proximity will accelerate GCCs and resourcing in Canada, Mexico, and Latin America, where talent is stable and cost advantages remain,” ISG President and chief AI officer Steven Hall said. “GCCs in India will also continue to rise with broader capabilities and skills as enterprises shift strategic roles to India.”
India, currently home to more than half of the world’s GCCs, is projected to host more than 2,200 companies by 2030, with a market size nearing US$100 billion and generating up to 2.8 million jobs, according to a Nasscom-Zinnov report released last year.
Silicon Valley-based Constellation Research founder and chairman Ray Wang expects Trump’s move to lead to more GCCs in India, more local hiring in the US, more pressure to deliver automation and AI at the same time, less outsourcing, fewer H-1B visas and less job mobility.
“We are seeing a new world order on services economics,” Wang said. AFP, REUTERS
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