US companies are increasingly looking to India for offshore operations due to the significant rise in H-1B visa fees by President Donald Trump, experts in the industry and economists have stated. India, which houses more than half of the world’s global capability centres (GCCs), is becoming a center for high-value tasks such as AI and drug discovery, as per a report by Reuters.
President Trump recently signed an executive order imposing a fee of $100,000 (approximately Rs 88.6 lakh) on new H-1B visa applications for skilled foreign workers, a substantial increase from the previous fee ranging from $1,500 to $4,000 (Rs 1.3-3.5 lakh).
The administration’s focus on tightening H-1B visas, citing concerns about job displacement and national security, has caused confusion and disruption in the industry.
India, the world’s fifth-largest economy, is home to 1,700 GCCs, representing more than half of the global total. The country has transitioned from its tech support roots to becoming a hub for high-value innovation in various sectors, including the design of luxury car dashboards and drug discovery.
Indian GCCs, offering a mix of global expertise and strong local leadership, are emerging as crucial hubs for essential business functions. According to Rohan Lobo, partner and GCC industry leader at Deloitte India, India’s GCCs are well-positioned to steer the strategic shift for US firms.
Lobo mentioned that several US companies are reevaluating their workforce requirements and considering moving operations to India. He highlighted increased activity in sectors like financial services and technology, particularly among firms with exposure to US federal contracts.
Moreover, two US senators reintroduced a bill to tighten regulations on the H-1B and L-1 worker visa programs, aiming to address perceived loopholes and misuse by major employers.
Industry experts anticipate that if the visa restrictions by Trump remain unchallenged, US companies will relocate high-end work related to AI, product development, cybersecurity, and analytics to their India-based GCCs, opting to retain strategic functions in-house rather than outsourcing.
The uncertainties triggered by recent changes have spurred discussions on transferring high-value tasks to GCCs, a trend that many companies were already exploring.
Lalit Ahuja, founder and CEO of ANSR, emphasized the urgency of the situation, noting that the COVID-19 pandemic had demonstrated that key tech tasks could effectively be carried out from any location.
Major tech companies like Amazon, Microsoft, Apple, Google parent Alphabet, as well as financial institutions such as JPMorgan Chase and retailer Walmart, were among the leading sponsors of H-1B visas. These companies have significant operations in India but refrained from commenting on the matter due to its sensitive political nature.
The possibility of roles shifting to India, Mexico, Colombia, or Canada is being considered by industry leaders. Even before the increased H-1B visa fees and the revised selection process proposed by Trump, India was projected to host GCCs for over 2,200 companies by 2030, with a market size nearing $100 billion.
However, concerns exist regarding the US outsourcing tax proposal, with industry leaders adopting a cautious approach due to the potential impact of the proposed HIRE Act, which could levy a 25% tax on overseas outsourcing payments. This legislation poses significant challenges to India’s IT and business process outsourcing sectors.
While some companies are expanding their GCC presence in India, others are observing developments closely before making strategic decisions. A wait-and-watch approach is being adopted by certain industry players amid the evolving landscape.