Trump’s visa fee hike is not the only worry. Hostility mounts for Indian IT in US

Homegrown Tata Consultancy Services Ltd, the country’s largest information technology (IT) services company, and India-heritage Cognizant Technology Solutions Corp. were among the companies targeted by two senators, Republican Charles E. Grassley and Democrat Richard J. Durbin, over hiring practices. A third senator, Tom Cotton, is considering bills to reform of H-1B programme, while his Republican peer Bernie Moreno has proposed an HIRE Act to increase taxes on companies offshoring work.

Growing scrutiny makes the $283-billion local outsourcing industry even more vulnerable after Trump signed an executive order to increase the one-time fee for H-1B Visas from the current $1,000 to $100,000 starting next year. The target is the alleged misuse of H-1B visas, which enable highly skilled non-immigrants to work in the US temporarily. These permits are issued for three years with an option to renew for up to six years. Indian IT companies accounted for 70% of such visas issued in 2024.

“The question is, how impactful are the letters by Chuck Grassley and Dick Durbin? In my opinion, very. There could be potential Senate investigations into the issue of H-1B visas, and leaders of all the companies could be called to give sworn testimonies before the Senate,” said Russell A. Stamets, a partner at Circle of Counsels, a New Delhi-based law firm.

“Indian companies desperately need knowledgeable American voices to help them navigate this, not simply people who have lived in the US for some time. Cultural nuance is critical in these discussions,” said Stamets.

Last Wednesday, judiciary committee chairman Grassley and Durbin wrote to TCS CEO K Krithivasan and his Cognizant counterpart S Ravi Kumar over their hiring practices.

“TCS recently announced plans to lay off over 12,000 people worldwide, including American staff. For example, TCS laid off nearly five dozen employees in its Jacksonville office alone last month,” read the 24 September letter to Krithivasan.

TCS sponsored 5,505 H-1B employees in FY25, the second-largest beneficiary, behind Amazon.com Inc. The senators accused the company of firing Americans and substituting them with H-1B employees.

“TCS is already under investigation by the Equal Employment Opportunity Commission for allegedly firing older American workers in favor of newly hired South-Asian H-1B employees. TCS is doing itself no favors by replacing Americans with H-1Bs while this investigation is ongoing,” said the letter.

Accused of discrimination

They accused Cognizant of discriminating against white Americans.

“Last year, a federal jury concluded that Cognizant intentionally engaged in race-based discrimination by favoring South-Asian H-1B workers over American employees. The jury also found that Cognizant’s conduct warranted punitive damages. Cognizant is doing itself no favors by continuing to replace Americans with H-1B workers on the heels of this verdict,” read the 24 September letter to Kumar.

Last fiscal, Cognizant received approvals to hire 2,493 H-1B employees, making it the seventh-largest user of these visas.

TCS, which follows an April-March financial calendar, ended FY25 with $30.18 billion in revenue, while Cognizant, which follows a January-December financial calendar, generated $19.74 billion in revenue.

The senators asked nine questions to both Krithivasan and Kumar, including the reasons behind hiring H-1B employees while laying off their American staff, and whether TCS and Cognizant deliberately hid their H-1B recruitment ads by listing them separately from general hiring ads.

The senators also sought answers on whether both companies paid the same salaries and allowed similar benefits to H-1B workers and their American counterparts.

TCS and Cognizant have until 10 October to respond to the letter from US lawmakers.

Queries emailed to TCS, Cognizant, and senators Grassley and Durbin went unanswered.

To be sure, both Grassley and Durbin have been working to introduce more stringent laws that address the H-1B visa issue since 2007. Both also wrote to the remaining eight large beneficiaries of H-1B visas, including Amazon, Apple Inc., and JPMorgan Chase & Co.

H-1B reform agenda

Cotton, meanwhile, said he might introduce two bills that suggest changes to the H-1B program.

“President Trump and @SecretaryLCD (Secretary Lori Chavez-DeRemer) are absolutely right that the H-1B program needs reforms,” said Cotton in a 26 September social media post on X. “Next week I’m introducing two bills that will bring badly needed changes to this program and put American workers first.”

Earlier this month, Moreno, a senator from Ohio, proposed the HIRE legislation, which aims to make outsourcing costlier and reduce reliance on cheap foreign labour. Indian IT firms earn nearly three-fifths of their revenue from the US as large American companies outsource their back-end tech work to homegrown IT services companies, including TCS, Infosys, and Wipro.

Offshoring a target

However, the HIRE Act may not become law, and even if it did, its impact would be higher on American firms than on homegrown IT service providers, as the tech service providers are expected to pass on the costs to their clients, Mint reported on 10 September, citing conversations with sector experts and analysts.

Still, the changing regulatory landscape, coupled with AI, could be a double whammy for Indian tech firms.

“I believe the rise of AI is a bigger risk to the Indian IT outsourcing firms. So, all these policies and regulatory changes regarding free people movement, along with the rise of AI, are like a double-whammy for outsourcing firms,” said Stamets. “Only the most innovative tech outsourcing firms will be able to work around and capitalise on the opportunity.”

Investors are anxious as the country’s 10 largest IT services companies have shed nearly 8% in their combined market cap last week.