The HIRE Act seeks to discourage large-scale offshoring of service-sector jobs from the US. It introduces a 25% excise tax on outsourcing payments made to foreign entities for services that benefit US customers. The proposal also eliminates tax deductions for relocation expenses, restricts access to federal contracts and loans for firms that offshore more than 10% of their workforce, and mandates public disclosure of job relocations. 

• 25% excise tax on outsourcing payments that benefit US customers
• Elimination of tax deductions related to job relocation costs
• Restrictions on federal contracts, grants, or loans for firms with high offshore ratios
• Mandatory disclosure of jobs and functions relocated abroad
• Department of Labor oversight and public list of companies moving work offshore

• Introduced in both chambers of Congress and referred to the Senate Finance Committee; hearings are underway to assess fiscal feasibility and enforcement mechanisms
• Not an active policy; still a proposal under fiscal and implementation review

The draft bill defines outsourcing payments as any payment made by a US company to a foreign person for services provided for the benefit of persons located in the US.
Under this definition:

• Both offshore and nearshore delivery fall within the taxable scope because both involve payments to non-US entities for work benefiting US customers.
• Nearshore delivery (for example, Mexico, Costa Rica, Colombia, and Canada) may, however, qualify for exemptions or reduced exposure under Free Trade Agreements (FTAs), tax treaties, or corporate ownership structures. Enforcement is expected to focus primarily on traditional offshore locations such as India and the Philippines.
• Global Capability Centers (GCCs), which are wholly owned entities of US companies abroad, are generally viewed as internal extensions of the parent organization rather than external vendors. It is not yet clear whether the HIRE Act’s definition of outsourcing payments would apply to such intra-company cost transfers. While current industry interpretation suggests these may be treated differently from third-party transactions, it remains unconfirmed pending Treasury or IRS clarification.
• These assumptions are based on trade precedents and industry interpretation; the bill text does not yet clarify how enforcement would distinguish among offshore, nearshore, and GCC operations.

The extent of impact will depend on how broadly the excise tax is applied and whether nearshore or captive delivery structures receive exemptions. The modeling assumes a 25% tax applied to gross outsourcing payments for services benefiting US customers.

• Low scenario (high probability, low impact): The bill progresses slowly or applies narrowly to specific outsourcing categories. Only part of offshore and nearshore delivery would qualify as taxable. Offshore-heavy portfolios would see 5-8% total cost increases, with minimal operational disruption. Most buyers would likely absorb the impact rather than reconfigure delivery portfolios.
• Base scenario (moderate probability, moderate impact): The bill passes largely in its current form, covering most outsourcing payments tied to US-benefiting work. Companies with 50-70% offshore or nearshore delivery could see 10-20% total cost increases from the excise tax, compliance reporting, and limited captive exposure. However, shifting work to the US is not an effective hedge because US delivery costs are already 2-3 times higher than offshore, hiring cycles are longer, and the domestic talent market remains tight.
• High scenario (low probability, high impact): The act is fully enforced with minimal exemptions, taxing nearly all foreign-delivered services for US customers. Offshore-heavy portfolios (80-90% foreign delivery) could face 18-22% total cost increases, rising toward 25% if nearshore or GCC delivery is also taxed. Even in such a case, moving work to the US would not reduce cost exposure, as US delivery would remain significantly more expensive given wage levels, hiring bottlenecks, and sustained labor shortages in key digital and business process roles.

• Offshore and nearshore delivery will remain the backbone of operating models but may increasingly move from third-party outsourcing to GCC structures to manage tax exposure and control cost transparency.
• Nearshore delivery will expand as a compliance-friendly and operationally flexible option, especially for regulated accounts where proximity to the US and FTA coverage reduce enforcement risk.
• US presence will grow selectively, focused on client-facing, regulated, and high-value functions where onshore proximity provides strategic benefit.
• Even under strong enforcement, global leaders are unlikely to rebase significant delivery to the US given that US talent costs are already 2-3 times offshore and hiring remains slow due to skill shortages.

• Companies will evaluate taxable exposure and rebalance among offshore, nearshore, and captive models rather than undertake full-scale reshoring.
• They will strengthen intercompany governance to clearly differentiate internal GCC costs from third-party outsourcing payments.
• Service providers will ring-fence US business units, refine pricing structures, and increase transparency in client contracts to account for excise exposure.
• Both buyers and providers of global services will model dual cost scenarios, recognizing that while offshore work may attract tax, US hiring will remain substantially more expensive and slower to execute.
• GCCs will be prioritized as lower-risk, cost-efficient vehicles for sustaining scale and regulatory alignment without losing delivery agility.

The HIRE Act remains a legislative proposal with uncertain implementation prospects and definitions. While its current language technically covers both offshore and nearshore delivery, the probability of full enforcement appears low. Nearshore centers may receive limited exposure due to trade agreements and lower political sensitivity, while GCCs could be treated differently if intra-company transfers are excluded from the definition of outsourcing payments.

The larger issue for global organizations is that the act introduces cost pressure on both sides of the delivery equation. Offshore delivery may become more expensive due to excise taxation and compliance overhead, while US delivery already carries a significantly higher cost and faces persistent talent shortages and longer hiring cycles.

Given these factors, the HIRE Act does not create a clear incentive to reshore. Instead, it reinforces the need for balanced, flexible global delivery portfolios that combine offshore efficiency, nearshore compliance agility, and selective US presence. The pace and scope of this proposal will also depend on the political environment and lobbying from industry associations, which could moderate final implementation.

This proposal’s goal is to reduce reliance on foreign students in US higher education and to shorten post-graduation work authorization, particularly in Science, Technology, Engineering, and Mathematics (STEM) programs. The intent is to increase domestic participation in high-skill roles and limit the use of study-to-work migration channels as a long-term employment pathway.

• Introduces annual and country-specific quotas on F1 student visas
• Reduces the STEM Optional Practical Training (OPT) work authorization period from 36 months to 12 months
• Expands oversight of Curricular Practical Training (CPT) internships and university-linked employment programs
• Restricts partnerships between universities and third-party placement or recruiting firms

• The proposal is not an active policy; it remains under inter-agency review by the Departments of Homeland Security (DHS) and Education.
• No formal DHS or Department of Education proposal is currently published. This analysis references provisions under discussion in the White House Compact for Academic Excellence and related university consultations as of September 2025. These measures remain speculative and directional.
• Enforcement probability is considered low to moderate in the near term given political complexity and resistance from universities and technology employers.

The effects of this proposal would manifest gradually, primarily through wage inflation and hiring friction within the US STEM labor market.

• Low scenario (high probability, low impact): The proposal is delayed or introduced in a limited form with exemptions for STEM graduate programs. Wage growth remains close to baseline, with US STEM salaries increasing 1-2% faster than current trends. Companies would experience little near-term disruption.
• Base scenario (moderate probability, moderate impact): The policy advances in its current form, reducing foreign student inflows and shortening post-study work authorization. Entry-level STEM wages grow 3-5% faster annually than baseline over five years, resulting in a cumulative increase of 15-25%. Talent shortages become noticeable in tier-1 metro markets and high-demand technical roles such as software engineering, data science, and cybersecurity.
• High scenario (low probability, high impact):The proposal is implemented aggressively, with strict quotas and limited exemptions for STEM fields. International STEM enrollment drops sharply (20-25%), leading to annual wage inflation of 6-8% for entry-level technical roles and spillover effects into mid-level bands. Hiring cycles lengthen, and companies expand offshore and nearshore pipelines to maintain delivery capacity.

Offshore and nearshore centers will capture a larger share of early-career STEM work as enterprises rebalance against rising US wage costs.

Global Capability Centers (GCCs) will expand in key talent markets such as India, the Philippines, and Canada to secure scale and continuity.

US delivery will focus increasingly on senior, client-facing, and regulated work, while early-career technical execution migrates offshore or becomes automated.

The overall cost structure for US-based digital and engineering delivery will increase 3-5% annually, compounded by wage inflation and hiring friction.

• Companies will diversify entry-level hiring, strengthening relationships with US universities while building offshore graduate pipelines to maintain scale.
• They will invest in automation, low-code tools, and digital platforms to reduce dependency on incremental US headcount.
• Service providers will expand recruitment and training in offshore locations, focusing on digital, data, and engineering roles previously staffed through the OPT route.
• Organizations will adopt integrated workforce planning models, aligning hiring, automation, and global location strategy to offset talent scarcity and rising costs.

The proposal to limit international students remains conceptual and faces substantial resistance from the education and technology sectors. Even if partial measures advance, implementation is expected to be gradual and largely administrative rather than legislative.

Over time, however, such restrictions could reinforce existing wage inflation in US STEM roles and exacerbate the country’s structural talent shortage. Domestic hiring will remain difficult and expensive, with salaries already trending 2-3 times higher than offshore equivalents. As a result, enterprises are unlikely to substitute offshore work with US talent even if foreign student inflows decline.

The likely outcome is gradual cost escalation rather than sudden disruption. Offshore and nearshore delivery will expand further, automation will absorb some early-career roles, and US hiring will focus on specialized, client-facing, or regulatory functions. Leaders should view this policy as a potential long-term labor supply constraint rather than an immediate structural shift.