Experts suggest that the Trump administration's restrictive H-1B visa policies, particularly the increased application fees, may incentivize U.S. companies to shift high-end work to their global capability centers (GCCs) in India. This shift could further boost the growth of Indian GCCs, which already handle a wide range of operations, from finance to research and development.
The crackdown on H-1B visas, including a $100,000 application fee, may lead U.S. firms to move high-end work related to AI, product development, cybersecurity, and analytics to their GCCs in India. This would allow them to keep strategic functions in-house rather than outsourcing them. Industry experts believe that the growing uncertainty caused by these visa changes has accelerated discussions about shifting high-value work to GCCs, a move many firms were already considering.
India is currently home to around 1,700 GCCs, accounting for over half of the global total. These centers have evolved beyond their initial focus on tech support to become hubs of high-value innovation, contributing to areas such as luxury car dashboard design and drug discovery. The increased demand for GCC services could potentially cushion the impact on India's $283 billion IT industry, which contributes nearly 8% of the country's GDP, from the reduced flow of services due to visa restrictions. Nomura analysts suggest that lost revenue from H-1B visa-reliant businesses could be offset by higher service exports through GCCs as U.S.-based firms seek to bypass immigration restrictions and outsource talent.
Many U.S. firms are reassessing their India strategies in light of these changes. While some companies are hesitant to comment due to the politically sensitive nature of the issue, the India head of a retail GCC suggested that more roles could move to India, or corporations might near-shore them to countries like Mexico or Colombia, with Canada also potentially benefiting. Even before the increased H1-B visa fees and the proposed changes to the selection process, projections indicated that India would host the GCCs of over 2,200 companies by 2030, with a market size nearing $100 billion.
Some experts believe that these visa restrictions may backfire on the U.S., potentially pushing more work offshore to India. A prohibitive fee for each new H-1B visa is designed to curb the influx of foreign workers into the U.S. and encourage companies to hire locally. However, this may lead to increased offshoring to India. Data from Motilal Oswal Financial Services indicates that major tech firms and IT multinationals accounted for a significant portion of all H-1B visas approved in FY24. With the increased costs associated with sponsoring H-1B workers, these firms may find it more cost-effective to shift work to their GCCs in India.
According to Parvathy Tharamel, a partner at Trilegal law firm, India has become a key hub for international banks' global capability centers, managing essential business, compliance, technology, and innovation operations. She believes that the new H-1B restrictions will accelerate this trend, driving more cross-border technology and high-value roles into Indian hubs. Despite the intention to safeguard American employment through immigration restrictions, analysts suggest that these regulations might encourage banks to strengthen their presence in Indian technology centers like Mumbai, Bengaluru, and Hyderabad, which already employ over 1.9 million people.
