Trump's H-1B Visa Fee Hike Accelerates US Companies' Shift to Indian Global Capability Centers

US President Trump recently elevated H-1B visa application costs to $100,000, a significant increase from the previous range.

Bengaluru/Hyderabad:

The recent H-1B visa restrictions imposed by Donald Trump are expected to accelerate American companies' migration of essential operations to India, substantially boosting the expansion of global capability centers (GCCs) that manage everything from financial operations to research and development, according to economists and industry experts.

India, the world's fifth-largest economy, currently hosts 1,700 GCCs, representing over half of the worldwide total. These centers have evolved beyond basic tech support to become hubs of high-value innovation, developing luxury car dashboard designs and contributing to pharmaceutical breakthroughs.

The increasing adoption of artificial intelligence combined with stricter visa regulations is compelling US corporations to reconsider their workforce strategies. Indian GCCs are emerging as resilient centers that effectively combine international expertise with strong local leadership.

"GCCs are uniquely positioned for this moment. They serve as a ready in-house engine," observed Rohan Lobo, partner and GCC industry leader at Deloitte India, who confirmed that numerous American firms are reassessing their workforce requirements.

"Plans are already underway" for such transitions, he added, noting increased activity particularly in financial services and technology sectors, especially among companies with US federal contract exposure.

Lobo anticipates that GCCs will "take on more strategic, innovation-led mandates" in the future.

This month, US President Trump increased new H-1B visa application fees to $100,000, up from the previous $2,000 to $5,000 range, creating additional pressure on US companies that depend on skilled foreign workers to fill crucial talent gaps.

On Monday, US senators reintroduced legislation to strengthen regulations governing H-1B and L-1 worker visa programs, targeting what they described as loopholes and abuses by major employers.

If Trump's visa restrictions remain unchallenged, industry specialists predict that US firms will relocate sophisticated work related to AI, product development, cybersecurity, and analytics to their Indian GCCs, preferring to maintain strategic functions in-house rather than outsourcing them.

The growing uncertainty caused by these recent changes has given fresh momentum to discussions about transferring high-value work to GCCs, conversations that many companies were already engaged in.

"There is a sense of urgency," stated Lalit Ahuja, founder and CEO of ANSR, which has assisted FedEx, Bristol-Myers Squibb, Target, and Lowe's in establishing their GCCs.

REASSESSING INDIA STRATEGIES

This acceleration could result in "extreme offshoring" in certain cases, according to Ramkumar Ramamoorthy, former managing director of Cognizant India, who noted that the COVID-19 pandemic demonstrated that key technological tasks could be performed from any location.

Major technology companies including Amazon, Microsoft, Apple and Google parent Alphabet, along with Wall Street bank JPMorgan Chase and retailer Walmart, were among the leading sponsors of H-1B visas, according to US government data.

All have substantial operations in India but declined to comment due to the political sensitivity of the issue.

"Either more roles will move to India, or corporations will near-shore them to Mexico or Colombia. Canada could also take advantage," remarked the India head of a retail GCC.

Even before Trump's substantial fee on new H-1B visa applications and proposed selection process favoring higher-paid workers, India was projected to host GCCs of more than 2,200 companies by 2030, with a market size approaching $100 billion.

"This whole 'gold rush' will only get accelerated," Ahuja said.

IMPLICATIONS FOR INDIA

Others expressed more skepticism, preferring a "wait and watch" approach, especially as US companies could face a 25% tax for outsourcing work overseas if the proposed HIRE Act passes, potentially causing significant disruption to India's service exports.

"For now, we are observing and studying, and being ready for outcomes," said the India head of a US drugmaker's GCC.

India-US trade tensions have expanded from goods to services, with visa restrictions and the proposed HIRE Act threatening to diminish India's cost advantage and restrict cross-border service flows.

While the $283-billion IT industry that contributes nearly 8% of India's GDP may experience pressure, the increasing demand for GCC services could potentially offset such impacts.

"Lost revenues from H-1B visa reliant businesses could be somewhat supplanted by higher services exports through GCCs, as US-based firms look to bypass immigration restrictions to outsource talent," Nomura analysts stated in a recent research note.