The United States has long been a prime destination for skilled Indian workers, particularly in the IT sector. However, recent policy changes are causing concern among Indian professionals and businesses alike. While the hiked H-1B visa fees have garnered significant attention, the proposed HIRE Act could pose an even greater threat to the prospects of Indian talent in the US.
The Halting International Relocation of Employment (HIRE) Act, introduced by Senator Bernie Moreno on October 6, 2025, aims to discourage American companies from outsourcing jobs overseas. The core of the HIRE Act is a proposed 25% tax on payments made by US companies to foreign individuals for services consumed within the United States. Furthermore, the bill would prevent US firms from claiming tax deductions related to these outsourcing payments. The collected revenue would then be channeled into a "Domestic Workforce Fund" to support apprenticeships and training programs for American workers. If enacted, the changes would apply to payments made after December 31, 2025.
Former Reserve Bank of India (RBI) Governor Raghuram Rajan has voiced strong concerns that the HIRE Act could be more damaging to India's economic interests than the increased H-1B visa fees. Rajan noted that the HIRE Act could directly tax outsourced work, which has extensive implications for countries like India that heavily rely on service exports. Congress leader Jairam Ramesh has also warned that the bill reflects a growing sentiment in the US that white-collar jobs should not be "lost" to India.
The HIRE Act's implications for Indian IT, BPO, and consulting sectors, which heavily depend on US outsourcing contracts, could be severe. The proposed tax could weaken their competitive edge and potentially reduce new contracts. This could lead US firms to look inwards rather than hiring foreign workers, making outsourcing and offshoring expensive.
The H-1B visa, a non-immigrant visa that allows US employers to temporarily employ foreign workers in specialty occupations, has long been a pathway for skilled Indian professionals. However, the recent imposition of a $100,000 annual fee on H-1B visa applications has already created hurdles. This increase has been criticized for potentially disrupting US innovation, global business operations, and impacting thousands of Indian professionals working in America. The US Citizenship and Immigration Services (USICS) has begun issuing Requests for Evidence (RFEs) demanding payment of the new $100,000 H-1B visa fee, causing confusion among immigration attorneys and employers.
While the increased H-1B visa fee presents immediate challenges, experts suggest that the HIRE Act has the potential to inflict more significant long-term damage. The HIRE Act's 25% tax on outsourcing payments could drastically alter the financial viability of US companies utilizing Indian IT and BPO services.
To mitigate the potential impact of the HIRE Act, Indian companies are being urged to diversify their markets beyond the US, explore opportunities in regions like the Middle East, the UK, and Australia. They are also encouraged to move up the value chain by offering advisory and tech-enabled services and to embed AI into their delivery models. Simultaneously, companies are investing more in upskilling domestic workers while selectively using immigration for truly critical roles.
The HIRE Act is not yet law, and it may undergo changes. However, it signals a growing protectionist sentiment in the US, which could reshape the landscape for skilled Indian workers and the Indian IT industry.
