New Delhi: On September 19, President Donald Trump announced that a fee of $100,000 (approximately Rs 88 lakh) will now be levied on every new H-1B visa application. India is the most affected country by this decision, as 71% of all H-1B visas issued last year were granted to Indians. This fee will have the greatest impact on IT companies, whether Indian or American.
This announcement harmed both Indian and American tech companies. According to a media report, two major Indian IT companies, TCS and Infosys, were the most affected. In just one week after the fee was announced, TCS's shares fell 8.9% and Infosys's 6.1%. Two major US tech companies, Amazon and Microsoft, also use H-1B visas extensively. Following the fee announcement, Amazon's shares fell 4.9% and Microsoft's 1.4%. The question is, why was the impact on American companies less?
The salary data for H-1B employees helps explain this difference. The average annual salary of H-1B employees at TCS is $78,000. The average salary for Infosys employees is $71,000. Meanwhile, Amazon employees earn an average of $143,000 and Microsoft employees $141,000. This means that the fee is almost twice as high as the salary of employees at Indian companies. This means that this fee impacts Indian companies' profits more.
The coming times look challenging for Indian IT companies dependent on H-1B visas. US policy now appears to be shifting towards granting visas to companies that pay higher salaries. This new fee of $100,000 is seen as the first step in that direction.
It's noteworthy that American tech companies did not oppose this fee. Because H-1B visas are awarded through a lottery system, if this fee discourages Indian companies from applying, it increases the chances of American companies receiving visas.
One positive aspect of this could be that Indian IT companies will now hire more people within the country. Domestic workers could replace the H-1B visas that are no longer available. If companies adapt their business models to this change, their shares could rebound, and the current decline could prove to be a good opportunity for investors.