US HIRE Bill Unveils New Challenges for India’s Struggling IT Sector

American legislation restricting H-1B visa-dependent firms adds pressure to India’s $245 billion technology industry already facing global headwinds.

The United States House of Representatives passed the HIRE Act on November 8, 2025, introducing stringent restrictions on companies with high dependency on H-1B visas. This legislation directly impacts India’s information technology sector, which accounts for nearly 7% of the country’s GDP and employs over 5 million professionals. The bill comes during a period of significant challenges for Indian IT firms, including reduced global demand, automation pressures, and increasing protectionism in key Western markets.

📊 Facts & Data

The HIRE Act imposes new limitations on companies where more than 50% of their workforce uses H-1B or L-1 visas. These companies face additional scrutiny and compliance requirements. Indian IT firms typically utilize these visa programs for 15-20% of their US-based workforce. The legislation also increases minimum salary requirements for H-1B holders by 35% above current levels. This could raise operational costs for Indian IT majors by $800 million to $1.2 billion annually according to industry estimates.

India’s IT services exports reached $194 billion in 2024, with the United States accounting for approximately 60% of total revenue. The sector has already seen growth slow to 8% in FY2024 from double-digit figures in previous years. Major firms including TCS, Infosys, and Wipro derive between 50-65% of their revenue from North American markets.

🗣️ Reactions & Quotes

NASSCOM President Debjani Ghosh stated, “This legislation creates additional barriers for Indian companies that have contributed significantly to the US technology ecosystem. We are engaging with stakeholders to find balanced solutions.”

Infosys CEO Salil Parekh commented, “We have been diversifying our delivery models and local hiring. The bill accelerates our existing strategy toward greater localization.”

US Senator Mark Warner (D-VA) noted, “The HIRE Act protects American workers while ensuring companies can access specialized global talent when truly needed.”

Opposition leaders in India criticized the government’s response. Congress MP Rahul Gandhi said, “The Modi government failed to anticipate this protectionist wave. Our IT professionals deserve better diplomatic protection.”

🌍 Impact & Implications

The immediate impact includes project cost increases and potential delays in service delivery. Clients may face 10-15% higher pricing for IT services from Indian providers. Companies must accelerate local hiring in the US, increasing operational costs by 25-30% compared to visa-based deployments.

Long-term implications involve fundamental business model changes. Indian IT firms must invest more in automation, remote delivery capabilities, and near-shore centers. The sector may see consolidation among smaller players unable to bear increased compliance costs.

For Indian professionals, the bill reduces opportunities for on-site assignments and potential immigration pathways. It may accelerate reverse brain drain as experienced professionals return to India.

📜 Background & History

The H-1B visa program began in 1990 as a temporary work visa for specialized occupations. Indian IT companies became major users from the late 1990s onward. Previous restrictions include the 2017 “Buy American, Hire American” executive order and the 2020 visa ban during the pandemic.

Indian IT’s growth trajectory shows remarkable resilience. The sector survived the Y2K crisis, 2008 financial crisis, and multiple visa fee increases. Each challenge prompted business model evolution toward higher value services.

The current crisis differs through combination of protectionism, automation, and pandemic-induced remote work acceptance. Companies had already begun shifting toward local hiring before the HIRE Act.

Conclusion / What’s Next

Indian IT firms face 12-18 months of transition pain. Most major companies have contingency plans including increased local hiring in the US and other markets. The sector will likely emerge leaner and more automated.

Future growth depends on diversifying beyond traditional application development and maintenance. Cloud services, cybersecurity, and digital transformation offer higher-value opportunities less dependent on visa programs.

The Indian government may negotiate bilateral agreements providing easier movement of professionals. Industry leaders advocate for including IT services in free trade agreements.

FAQs Section

What is the US HIRE Bill? The HIRE Act is American legislation restricting companies that heavily depend on H-1B visas. It imposes higher salary requirements and additional compliance burdens on such firms.

How does it affect Indian IT companies? Indian IT firms use H-1B visas for US deployments. The bill increases their operational costs and requires changes to their business models toward more local hiring and remote delivery.

Will this reduce IT jobs in India? Not immediately. Companies may initially absorb higher costs. Long-term, the sector may grow slower but will continue creating jobs in India through increased remote delivery and higher-value services.