Indian firms that heavily utilize H-1B visas are facing an increased risk of litigation due to the open language and wide scope of the U.S. Department of Labor's (DOL) Project Firewall. Launched in September 2025, this initiative aims to maximize compliance with the H-1B visa program and prioritize American workers in high-skilled jobs. Legal experts suggest that the broad language typically found in such provisions grants the U.S. government significant discretionary power.

Project Firewall empowers the DOL to investigate employers based on "reasonable cause" for suspected violations, including underpayment, poor working conditions, or discrimination against U.S. workers. Companies found in violation may face steep fines, back-pay penalties, and even be banned from participating in the H-1B program in the future. The DOL intends to share enforcement data with other agencies, such as the Department of Justice, the Equal Employment Opportunity Commission, and U.S. Citizenship and Immigration Services, to create a comprehensive inter-agency approach to preventing abuse.

Several Indian IT outsourcing firms, including Infosys, TCS, Wipro, Cognizant, and HCL, are expected to bear the brunt of this crackdown due to their extensive use of H-1B visas for on-site staffing in the U.S.. However, American tech giants like Amazon, Google, and Microsoft, which also employ a substantial number of H-1B visa holders, will face stricter compliance demands as well.

The implementation of Project Firewall, together with a $100,000 H-1B visa fee could reshape the tech industry by making it more expensive for U.S. firms to hire foreign talent, particularly Indian nationals who account for a significant portion of H-1B recipients. This may lead companies to reduce their reliance on H-1B visas, reserving them for only the most senior roles, while increasing local U.S. hiring and offshore operations to mitigate legal risks.

For tech companies and industries that heavily rely on H-1B workers, Project Firewall could translate into tougher scrutiny, higher costs, and stricter compliance requirements. This may result in higher expenses, tighter hiring pipelines, and potential delays in critical projects that depend on specialized engineers and programmers.

With American universities not producing enough skilled workers to meet the demand, some analysts believe that this crackdown could widen the talent gap and negatively impact innovation and competitiveness at a time when the U.S. is competing with global rivals in fields like AI, semiconductors, and advanced technology.

Project Firewall's open language and wide scope create a significant risk of litigation for Indian firms that rely on H-1B visas. Companies must ensure full compliance with H-1B regulations to avoid investigations, penalties, and damage to their reputation. The increased scrutiny and costs associated with the H-1B visa program may also prompt these firms to re-evaluate their hiring strategies and explore alternative talent sources.