Analysts expect companies to accelerate offshore delivery models and restructure vendor contracts rather than absorb the new visa costs.
President Donald Trump’s executive order imposing a $100,000 fee on new H-1B visa applications has fundamentally altered the economic calculus for enterprise IT departments, with analysts predicting accelerated offshore adoption and restructured vendor relationships as companies adapt to the nearly 500-fold fee increase.
The fee, effective September 21 for new applicants, jumped to $100,000 per visa. For enterprise IT departments relying on H-1B workers for specialized roles in cybersecurity, cloud architecture, data engineering, and artificial intelligence, the change represents more than a budget adjustment. It is reshaping global IT services delivery.
While the $100,000 figure dominates headlines, the actual annual impact is more nuanced. “Over the course of 6+1 years of H1B life, we’re looking at $15-16k of cost per year,” explained Ashutosh Sharma, VP and research director at Forrester. “So, it will make it possible to charge a slightly higher premium ($5-$7 per hour) going forward if clients insist on onshore resources.”
For enterprise IT budgets, this translates to calculable impacts. A mid-sized financial services firm employing 100 H-1B IT professionals could see new hiring costs of $10 million annually. For Amazon, which employed more than 14,000 H-1B workers as of June 2025, the potential impact exceeds $1.4 billion for new hires.
But enterprises will not simply absorb these costs. “No one is paying $100k visa fees, unless necessary,” Sharma noted.
Accelerated offshore migration
The most immediate response analysts expect is an acceleration of offshore development models that are already gaining momentum. “In the near term (months/quarters), we can expect the movement of some work offshore, as most contracts typically have flexible delivery clauses,” said Akshat Vaid, partner at Everest Group.
The timeline for these adjustments varies significantly by complexity. “Enterprises can move quickly on stop-gap measures, but full redesign takes time,” explained Sanchit Vir Gogia, chief analyst and CEO at Greyhound Research. “A nearshore pod in Canada or Eastern Europe can be stood up within a quarter, and some capability centre models promise readiness in as little as three months.”
However, comprehensive transformation requires longer horizons. “Changing the delivery model across an entire IT portfolio — renegotiating contracts, embedding governance, retraining teams — usually takes a year or more,” Gogia noted. “The surcharge has simply forced the pace of a transition already underway.”
The shift is already creating demand in India’s talent markets. “GCC (global competency centers) and ODC (offshore development centers) will see the accelerated growth in India,” said Shalu Bindlish, Director at Advaita Bedanta Consultants. “One can see a jump in office space rent and demand for talent in India.”
Contract restructuring
The fee increase is driving fundamental changes in how IT services contracts are structured. “They will not quietly absorb the surcharge,” Gogia observed. “Instead, contracts are being rewritten to reflect three shifts.”
First, sponsorship decisions become highly selective, reserved only for roles that cannot be substituted through offshore or automated alternatives. Second, pricing models will incorporate risk-sharing clauses that make visa exposure transparent. Third, fees will be more closely linked to outcomes, with automation gains expected to offset some labor cost increases.
“In the short-term, we expect them to absorb part of the cost in fixed-price deals while seeking mid-contract amendments for large transformational programs,” he said. Success in passing costs to clients will vary by skill type, with “some success likely in niche skills but harder in commodity ADM (application development & maintenance).”
The skills gap reality
Data suggests significant challenges in filling specialized roles with domestic talent. “US just does not have enough scale to do it on its own,” Sharma stated, citing research showing that while STEM graduates increased 45% between 2010 and 2019, “the proportion of foreign-born (primarily India and China) in STEM more than doubled during the same time.”
The gap is particularly acute in high-demand areas. “In areas like AI, cybersecurity, the supply gaps in skilled talent is already very steep,” Vaid noted. “Campus grads are taking a few years before they become project-ready.”
Strategic timeline and implications
For Fortune 500 companies, analysts expect an initial turbulence followed by stabilization. “There will be turbulence in the short run,” Gogia predicted. “Projects that relied on onsite rotations will need to be re-staffed, re-based, or delayed as providers adjust.”
However, the medium-term outlook suggests adaptation rather than disruption. “Over the course of 12 to 18 months, the new delivery models will stabilise and efficiency gains will claw back much of the extra spend,” Gogia explained. “Transformation programmes will continue, but they will be re-plumbed into models that boards consider resilient.”
Sharma anticipated minimal immediate impact for large enterprises: “No impact in the next 12 months or so. But one can expect the GCCs of these Fortune 500 firms to increase their hiring in India to mitigate the impact.”
The policy change also accelerates geographic diversification strategies. Public policy consultant Prasanta K Roy expected broader market shifts. “Indian IT needs to urgently diversify from the US while the latter needs to diversify to other bases like the EU that they can contract from,” he said, noting “IT services exports still 60% US after all these years.”
Roy anticipated that the fee increase would hit project economics. “This will hit budgets and possibly timelines somewhat,” he said. “However, I expect significant internal pressure – with big tech and Fortune 100 majors to convey strongly to the US administration that this will make American firms less competitive.”
Technology companies and IT services providers remained silent on strategic responses. Amazon, Google, Meta, and Microsoft did not respond to requests for comment. Indian IT services companies, including TCS, Infosys, HCL Technologies, and Tech Mahindra too didn’t respond to requests for comments.
Roy framed the challenge in broader strategic terms: “The damage is done. Trump’s rapid vacillation points to continuing uncertainty and increasing pressure for US firms to consider building/expanding GCCs.” The long-term outcome, analysts suggested, was not disruption but evolution toward more robust delivery models. “Fortune 500s should plan for short-term friction, but the long-term outcome is a sturdier delivery model,” Gogia concluded. “The surcharge is disruptive, but it does not derail transformation — it forces it onto a more resilient footing.”
