Indian IT companies are strategically reducing their dependence on H-1B visas to accomplish their work in the United States, adapting to evolving global dynamics and stricter immigration policies. This shift involves a multi-pronged approach, including increased local hiring, nearshore centers, and diversification into new growth sectors.

Driving Factors Behind the Shift

Several factors contribute to this change in strategy. Rising costs and increasingly complex immigration policies surrounding the H-1B visa program have made it less attractive for Indian IT firms. The Trump administration's stricter scrutiny of the H-1B visa program, aimed at preventing the displacement of American workers, has further accelerated this trend. Moreover, there's growing sentiment among some US officials who view the H-1B program as a "scam" that allows foreign workers to fill American job opportunities. This environment has prompted Indian IT companies to seek alternative approaches to meet their workforce needs in the US.

Strategies for Reducing H-1B Reliance

• Increased Local Hiring: Indian IT companies are actively hiring American workers to build their US-based teams. For example, Infosys plans to hire over 10,000 US workers by 2025. By focusing on underrepresented regions where tech jobs are in demand, these companies contribute to local economies and foster a skilled workforce. This strategy aligns with the growing emphasis on hiring American workers and reduces the need for H-1B visas.
• Nearshore Centers: Establishing nearshore centers in countries like Canada and Mexico provides access to a skilled talent pool while remaining geographically close to the US. This approach offers time zone advantages and cultural similarities, facilitating collaboration and communication.
• Diversification into New Growth Sectors: Indian IT companies are expanding their services into higher-margin, AI-based services within India. This diversification reduces their dependence on traditional outsourcing models and creates new opportunities for growth.
• Focus on Innovation and US Market Investment: Indian firms are investing heavily in US-based research and development, including partnerships with universities. Tata Consultancy Services (TCS), for example, collaborates with the University of California, Berkeley, to develop AI-powered applications. These investments drive economic growth and strengthen ties within the US.

Impact and Implications

The reduced reliance on H-1B visas has several implications. It allows Indian IT companies to become more integrated into the American economy, contributing to job creation and local economic development. Indian IT firms have already created 91,000 jobs in the USA. Furthermore, by focusing on upskilling and training, these companies are helping to build a diverse and competitive US workforce. However, some experts caution that potential policy changes, such as the proposed HIRE Act, could create new challenges for the Indian IT sector. This bill proposes a 25% excise tax on payments made by US companies to foreign entities for services consumed in the US, which could significantly impact the cost structure of global outsourcing.

The Broader Context

While Indian IT firms are reducing their H-1B visa dependence, US tech giants like Amazon and Microsoft continue to sponsor these visas to attract Indian talent, particularly for AI development. This reflects the ongoing demand for specialized skills in emerging technologies and the importance of global talent mobility. The shift also highlights the increasing role of American companies among the top applicants for H-1B visas.

Despite potential headwinds from stricter visa rules and proposed legislation, the Indian IT sector has demonstrated resilience and adaptability. By proactively embracing new strategies and investing in the US talent ecosystem, Indian IT companies are positioning themselves for long-term success in the evolving global landscape. This transformation also aligns with India's growing focus on digital self-reliance and its aspiration to become a global tech leader.