The New H-1B Visa Policy: A Turning Point for Indian IT Companies and U.S. Clients

The H-1B visa has long been the cornerstone of the Indian IT industry’s presence in the United States. Traditionally, Indian IT companies would send engineers onsite to U.S. client locations, working hand-in-hand with American teams to deliver software development, infrastructure management, and consulting services. For decades, this model worked seamlessly—U.S. companies gained access to highly skilled talent, while Indian IT firms earned significant revenues by placing their employees onsite at premium billing rates.

However, the dynamics of work have undergone a seismic shift since the COVID-19 pandemic. Remote working, once considered a backup option, has become the norm across industries. This transformation—combined with the proposed changes in the H-1B visa policy—could reshape how Indian IT companies operate in the U.S., ultimately benefiting both Indian service providers and American clients.

The Traditional Onsite Model

Before the pandemic, the presence of Indian engineers in the U.S. was almost a non-negotiable requirement. Clients valued physical proximity, believing that complex project management, communication, and collaboration were only possible when teams were co-located. H-1B visas enabled Indian IT companies such as TCS, Infosys, Wipro, and HCL Technologies to deploy tens of thousands of engineers onsite.

For instance, Infosys often cited that over 60% of its North American revenues came from projects staffed with employees working onsite under H-1B or L-1 visas. The costs were high—companies had to pay for visa processing, relocation, housing, and local allowances. Yet, clients accepted these costs, convinced that productivity and project success depended on onsite presence.

How COVID-19 Changed the Landscape

The pandemic turned this model upside down. Lockdowns and travel restrictions forced companies to adopt remote work overnight. What was once a reluctant experiment quickly became an efficient, sustainable, and even cost-effective way of doing business.

Three critical shifts emerged:

• Technology Infrastructure: Cloud adoption, secure VPNs, remote monitoring tools, and collaborative platforms like Zoom, Slack, and Teams created an environment where global teams could work in real-time without physical proximity.
• Cultural Acceptance: Managers and clients who once resisted remote work now realized that productivity was not only maintained but, in many cases, improved. For example, TCS reported that more than 95% of its global workforce operated remotely during 2020–2021, with no significant disruption to service delivery.
• Cost Efficiency: Remote delivery cuts down travel and onsite expenses. For U.S. clients already under pressure to reduce IT budgets, this became an attractive alternative.

The Impact of New H-1B Visa Costs

With proposed policy changes likely to increase the cost of H-1B visas for employers, U.S. clients will inevitably see higher project costs if they insist on the traditional onsite model. If sponsoring and retaining H-1B employees becomes more expensive, U.S. companies will look for alternatives.

This is where Indian IT firms stand to gain. Instead of absorbing additional visa costs or passing them on to clients, companies can shift to remote project execution from India. In fact, many leading IT companies have already declared “hybrid” or “remote-first” work models.

For example:

• TCS has launched its “25/25” vision: by 2025, only 25% of its employees will need to work from offices at any given point, and employees will spend no more than 25% of their time onsite.
• Infosys has invested heavily in digital collaboration hubs in India, enabling global delivery without geographical constraints.

Why This Benefits U.S. Clients

From a client’s perspective, the benefits are compelling:

• Lower Costs: U.S. businesses save not only on visa sponsorship fees but also on onsite premiums, housing, and relocation allowances. Remote work allows Indian engineers to deliver services at India-based costs, which are significantly lower than U.S. onsite rates.
• Access to Wider Talent Pools: Instead of being limited by visa quotas, clients can now tap into larger offshore teams with diverse skills. A project requiring niche expertise in cloud migration, for example, can quickly scale with 50 engineers working from Bengaluru without worrying about H-1B restrictions.
• Business Continuity and Scalability: Remote teams ensure continuity even in the face of disruptions like pandemics, geopolitical issues, or visa delays. This resilience is highly valued in today’s uncertain environment.

 

Why This Benefits Indian IT Companies

For Indian IT firms, the advantages are equally significant:

• Reduced Dependency on Visas: Companies will no longer need to rely heavily on H-1B approvals to execute U.S. projects. This mitigates the business risk associated with immigration policy changes.
• Better Profit Margins: Offshore delivery comes at lower costs while maintaining similar billing rates. This widens margins for Indian IT companies.
• Talent Retention: Employees prefer staying close to their families in India, avoiding the stress of relocation and immigration uncertainty. This improves job satisfaction and reduces attrition.
• Increased Global Competitiveness: As firms demonstrate the success of remote delivery models, they strengthen their global positioning against competitors like Accenture or IBM, which also leverage global talent hubs.

A Practical Example

Consider a U.S. bank requiring a large-scale digital transformation project. Under the old model, 200 Indian engineers might have been deployed onsite at an annual cost of $120,000 per employee (including salaries, visas, and living expenses). This adds up to $24 million annually.

In the remote model, the same 200 engineers could deliver services from India at an average cost of $40,000 per employee, totaling $8 million annually. Even if the bank pays slightly higher fees for enhanced remote infrastructure and cybersecurity, total costs may still be reduced by nearly 60%.

For the Indian IT company, delivering remotely means avoiding visa costs and operational hassles, while earning healthy margins. The U.S. bank, meanwhile, benefits from lower costs without sacrificing quality or efficiency.

Looking Ahead

The shift away from H-1B dependency is not without challenges. Issues like data security, compliance with U.S. labor regulations, and time zone management require careful attention. Yet, these are solvable through modern technologies, contractual safeguards, and distributed team structures.

Ultimately, the new H-1B visa policy could act as a catalyst for accelerating remote IT delivery. What once seemed like a temporary adjustment during the pandemic is now proving to be a viable, long-term strategy.

For Indian IT companies, this is an opportunity to reshape their global delivery model, reduce risks, and strengthen profitability. For U.S. clients, it is a chance to access world-class services at lower costs.

In the end, the winners on both sides will be those who embrace the new reality of borderless digital collaboration.