Mohandas Pai Warns $100,000 H-1B Visa Fee May Boost Offshoring

The recent announcement of a dramatic increase in the H-1B visa fee to $100,000 has raised concerns among industry leaders, with former Infosys Chief Financial Officer Mohandas Pai stating that this move could lead to a significant shift towards offshoring. Pai emphasized that the new fee is excessively high, likely deterring companies from submitting new applications for these visas and hampering their ability to attract international talent.

In comments made to the Press Trust of India (PTI), Pai noted, “Nobody’s going to pay $100,000; that is very true.” He described how this fee hike would primarily impact new applications, while existing H-1B visa holders remain unaffected for now. Pai explained that the current environment would likely lead companies to focus more on offshoring as the costs of hiring talent in the United States become prohibitive.

Industry Response and Future Implications

The shift towards offshoring, according to Pai, is a response to the high costs associated with hiring skilled workers domestically. He stated, “Now what will happen is everybody will work to increase offshoring…because it doesn’t make sense.” He further elaborated that companies will prioritize their overseas operations, stating that this trend could become evident over the next six months to one year.

The former CFO highlighted that while the H-1B wage structure is perceived as expensive, many companies pay significantly more than the proposed fee for skilled positions. “If they pay their staff $100,000, they charge their clients $150,000-$160,000,” he remarked, dismissing the narrative that H-1B visas are used to import low-cost labor.

Industry experts indicate that the number of fresh H-1B visa approvals for Indian technology firms generally averages between 8,000 and 12,000 annually. The repercussions of the fee increase extend beyond Indian companies, impacting major players like Amazon, Microsoft, and Google, which also rely on H-1B visas to recruit top talent.

The U.S. Citizenship and Immigration Services (USCIS) has reported that the demand for H-1B visas remains strong. For fiscal year 2025, Amazon led the list of H-1B visa approvals with 10,044, followed by Tata Consultancy Services (TCS) with 5,505 and Microsoft with 5,189. Other significant beneficiaries include Meta, Apple, and Google.

Concerns Over Innovation and Workforce Dynamics

The increase in the H-1B visa fee is part of a broader policy shift that some industry leaders fear may stifle innovation in the U.S. technology sector. Critics argue that this move could hinder the ability of companies to secure the best talent, thus limiting their competitive edge in an increasingly globalized market.

According to the proclamation signed by former President Donald Trump, the H-1B visa program has been a focal point for allegations of labor exploitation. The fee hike is seen as an effort to address concerns over the perceived abuse of the program. The U.S. Congress has previously set a cap of 65,000 H-1B visas, with an additional 20,000 allocated for professionals with advanced degrees from accredited U.S. institutions.

Data from the USCIS indicates that the number of foreign workers in STEM fields in the United States surged from 1.2 million in 2000 to nearly 2.5 million in 2019, reflecting a growing reliance on international talent. This expansion raises questions about the balance between nurturing domestic talent and the necessity of foreign expertise in maintaining the U.S.’s position as a leader in technology and innovation.

The implications of the fee increase are profound, potentially reshaping hiring practices and the landscape of the tech industry in the United States. As companies adjust to these changes, the industry will closely monitor how this policy shift influences their operations and overall competitiveness in the global market.