Advisory Note: Navigating the H-1B Visa Fee Rehaul

The US administration has issued a presidential proclamation introducing a $100,000 fee for new H-1B visa petitions filed abroad. The measure, framed as a restriction on entry of certain nonimmigrant workers, is set to be in effect for 12 months (unless extended). This move represents a sharp increase from current costs (~US$5,000-10,000 per petition for large organizations) and signals a significant policy shift.

What the proclamation does

  • Requires employers filing new H-1B petitions for workers outside the U.S. to pay a $100,000 fee
  • Applies only to new H-1B visa petitions filed abroad and is a one-time fee per petition, not an annual charge. Renewals, extensions, and current visa holders are not impacted
  • Allows for waivers in cases deemed to be in the “national interest” by DHS
  • Directs agencies to update prevailing wage rules and prioritize higher-paid, higher-skilled foreign workers

Why this matters for buyers of global services

  • Talent availability: Providers may cut back sharply on H-1B filings, reducing the pool of skilled foreign workers available onsite in the U.S. 
  • Cost pressure: Any H-1B resources staffed onsite could carry higher costs, with providers likely passing these through to buyers 
  • Delivery model shift: Providers will accelerate offshoring and nearshoring to avoid U.S. entry barriers, affecting delivery mix for clients 
  • Project risk: Shortage of onsite talent could affect time-sensitive programs (e.g., cloud, AI, cybersecurity) that depend on niche skills 
  • Shifting composition of H-1B usage: Historically, service providers accounted for the majority of H-1B visa approvals. However, their share has fallen from ~77% in 2014 to an estimated ~32% in 2025, as corporates and tech providers have expanded their direct filings (see chart). This means buyers are now more exposed to visa policy risk not only through vendors but also through their own internal talent pipelines and technology partners 

Likelihood vs visibility

  • The policy has already been enacted via proclamation, with scope now clarified. It applies only to new petitions filed abroad, not to renewals or current visa holders
  • Legal challenges may still arise, and implementation could be delayed or narrowed. Regardless, the issue is high-visibility: boards, regulators, and employees will expect companies to demonstrate preparedness

Potential cost increase if vendors pass through fees:

  • Current H-1B petition costs for large providers are ~US$ 5,000-10,000 per worker and the new US$ 100K fee represents a ~10x increase for new petitions
  • This will not affect renewals or current H-1B holders and the impact is limited to new petitions for attrition replacements in existing deals or for staffing new engagements
  • For existing engagements the effect is modest, typically less than 1% of ACV annually, as it only applies to backfilling attrition or modest growth
  • For new engagements, the impact can be material, ranging from 5-15% of ACV upfront depending on onsite mix and H-1B reliance (assuming organizations continue to pursue the current H-1B mix in their onsite teams)
  • Buyers should model both cases and prepare vendors to rebalance delivery models using more local, nearshore, or offshore talent to manage exposure

Practical rate card impact

  • Onsite resources can be billed anywhere between US$ 60 and US$ 400 per hour depending on seniority, role type and underlying technology
  • US$ 100K fee applies one time for each H-1B petition and if allocated across ~2,000 hours it adds ~US$ 50 per hour
  • For a typical role billed at ~US$ 75 per hour the effective rate could move closer to ~US$ 125 per hour if costs are fully passed through
  • Even partial pass-through would materially affect buyer cost structures for new hires brought on H-1B visas

 

Preparing for possible impacts: Proactive playbook for buyers

  • 1. Scenario and financial modeling

    • Estimate cost exposure under different scenarios using 2-5% of ACV for existing engagements and 5-15% of ACV for net new engagements in mid-long term
    • Stress-test vendor and your own dependence on H-1B resources (also keep an eye on L1 resources)
  • 2. Operational flexibility

    • Rebalance work across offshore, nearshore, and U.S. citizen/green card talent
    • Evaluate GCCs and alternative sourcing locations as buffers
  • 3. Contractual readiness

    • Review pass-through clauses for visa-related costs
    • Ensure flexibility to rebalance delivery location without heavy penalties
  • 4. Visa and immigration inventory

    • Maintain a full inventory of your visa pool (H-1B, L-1, others)
    • Track visa status, expiration dates, renewal cycles, and known travel dates
    • Identify workers at higher risk of being caught by new rules (e.g., those needing re-stamping abroad)
  • 5. Risk monitoring and stakeholder communication

    • Track clarifications from DHS on applicability (renewals, waivers)
    • Brief senior leadership on risk exposure and mitigation levers

Conclusion: Stay alert, not alarmed

The $100,000 H-1B fee is a clear signal of US intent to tighten inflows of foreign skilled talent. The scope is now clarified as a one-time fee on new petitions only, not renewals or existing visa holders. For existing engagements, the steady state impact is limited while for new deals the upfront exposure can be material. Enterprises should treat this as a high visibility, medium probability disruption and use it as a trigger to strengthen delivery resilience and diversify sourcing strategies.

Advisory note: navigating proposed outsourcing legislation in the US

Over the last few weeks there has been an uptick in rhetoric in the US against outsourcing and offshoring. The current administration has signaled intent to impose legislative barriers to US companies buying services overseas. Buyers and providers of IT and BPO services should prepare for potential impacts.

As an update to the developments we shared earlier, there are now several legislative proposals making their way through Congress that target offshored services. The two most prominent are the HIRE Act and the Keep Call Centers in America Act, which take different tacks to discourage outsourcing:

  • Keep Call Centers in America Act (2025): Requires advance notice before offshoring large call center operations, mandates customer disclosure of agent location and AI use, creates a public “offshoring list,” and restricts federal contracts/funding for firms using call centers abroad
  • HIRE Act (2025): Proposes a 25% excise tax on payments to foreign service providers, as well as the removal of tax deductibility; if passed in its current form, it could significantly increase the cost of offshore IT/BPO contracts

Traditional tariffs are designed for goods; services and digital delivery are difficult to tariff. Legislators are, therefore, exploring alternative instruments to penalize offshoring in the form of excise taxes on cross-border service payments, procurement and funding restrictions, mandatory disclosures, and other regulatory requirements, rather than a direct tariff at the border. It is a technical workaround to address the same political goal (encouraging jobs to stay onshore), given the impracticality of a true service tariff. In geopolitical terms, outsourcing is a discussion point in US-India relations and trade negotiations.

These proposals remain low likelihood but high visibility. The more immediate effect is reputational and operational, as boards, investors, and customers expect companies to demonstrate preparedness.

Outlook: low likelihood of passage, high visibility of risk

It is important to stress that the probability of these proposals becoming law in the immediate future is relatively low, whereas the political and public visibility is high. The HIRE Act, for instance, faces steep opposition and complexity. Critics argue it could hurt business competitiveness and raise consumer costs, and it would require significant new regulations to implement. As of now, it remains in committee, with any effective date likely pushed out if it progresses. The Keep Call Centers in America Act, despite bipartisan sponsorship, would need to pass both houses and would only take effect a year after enactment even if adopted.

However, the issue has entered the mainstream debate, which means executive teams and boards are increasingly aware of it. Media coverage and political sound bites (e.g., slogans like “Make Call Centers American Again”) have elevated negative sentiment for offshoring. Stakeholders will expect management to have a position and contingency plan. Indeed, some corporate leaders report fielding questions from board members on impact and readiness.

Bottom line: While an actual 25% service tariff or an enforced call center repatriation mandate may never materialize, the signal is clear, companies reliant on global service delivery should not dismiss the chatter outright. The prudent stance is to treat this as a risk factor to monitor and prepare for, rather than an imminent operational change. In risk management parlance, this is a low-likelihood, high-impact scenario, and one that carries reputational and business continuity implications even if it remains just a proposal.

Preparing for possible policy changes: proactive playbook

Rather than panic, organizations should respond by demonstrating foresight and resilience. Buyers can take several practical steps now to emphasize governance and board readiness.

  • 1. Scenario and financial modeling

    • Model a 2-5% cost increase and a 25% excise tax case
    • Quantify exposure by geography, vendor, and contract
  • 2. Operational flexibility

    • Stress-test geographic diversification (US, nearshore, offshore mix)
    • Confirm backup delivery options are viable
  • 3. Contractual readiness

    • Review “change in law” and cost pass-through clauses
    • Ensure contracts allow relocation flexibility without heavy penalties
  • 4. Regulatory preparedness

    • Anticipate enhanced reporting and disclosure obligations
    • Update call center scripts to disclose agent location or AI use if required
  • 5. Board and stakeholder communication

    • Prepare a one-page briefing for boards and execs on exposure and levers
    • Set up a mechanism to monitor changes as they arise

Conclusion: stay calm but be ready

The current outsourcing tariff rhetoric is more signal than reality. Technical barriers make broad service tariffs unlikely, though narrower measures (excise taxes, reporting rules, disclosure mandates) may emerge. The right stance is vigilance without alarm, reinforcing delivery resilience through flexibility, transparency, and preparedness. Above all, organizations should reassure boards and clients that the situation is under control.

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Our analysts are closely monitoring how global tech and services markets are responding to the impact of tariffs. Connect with us for forward looking planning.

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