US tightens grip on H-1B workers, Indian IT firms brace for higher costs

The US Department of Homeland Security is proposing to scrap the 60-day grace period that allows certain foreign workers, including H-1B visa holders, to remain in the country and seek new employment after losing their jobs

A proposed rollback of the H-1B job-loss grace period and new fees on certain visa extensions are set to put additional pressure on Indian IT companies’ US delivery models, potentially pushing firms towards greater local hiring and offshore expansion.The US Department of Homeland Security is proposing to scrap the 60-day grace period that allows certain foreign workers, including H-1B visa holders, to remain in the country and seek new employment after losing their jobs. The proposal is under review by the White House Office of Management and Budget, and has not yet changed existing rules.Separately, DHS has expanded the 9-11 Response and Biometric Entry-Exit Fee to cover certain H-1B and L-1 extension-of-stay petitions, including cases where workers remain with the same employer. The fee is $4,000 for H-1B and $4,500 for L-1 petitions, with the rule taking effect in September after its publication on August 10.These proposed modifications show a shift in the US immigration system from a relatively lottery-driven process to one that places emphasis on wages, compliance, documentation and employer preparedness.“The filing process is becoming more documentation-intensive. Selected employers must submit their H-1B petitions to USCIS within a time frame, with increased emphasis on precision and consistency of information provided throughout the registration, wage and petition stages. The proposed removal of the 60-day grace period could reduce the flexibility available to skilled professionals during employment transitions. If implemented, workers would have less time to find another job or change their status,” said Amit Gupta, Founder of eazyPetition.High-volume visa sponsors include global IT companies such as Google, Amazon, Microsoft, Infosys, Deloitte, Accenture, JP Morgan, Apple and Meta. Palak Gupta, Advocate, Jotwani Associates, said employers with 50 or more employees may be subject to higher visa fees if more than 50 per cent of their US workforce comprises employees in H-1B, L-1A or L-1B status as specified under Public Law 114-113.“Though this rule has benefited US citizens and the government in diluting the increased competition their employee market faces, companies are prohibited from shifting the onus of petition fees, attorney costs, or administrative surcharges onto visa holders or employees. The government, to safeguard employees via the US Department of Labor, has passed strict legislative provisions under USICS regulations and Title 8 of the Code of Federal Regulations (8 CFR). Consequences may be benchmarks for visa holders at the workplace, moderate increments, bonds or commitments for a strict number of years,” said Gupta.To mitigate fee penalties, IT providers are establishing tech centres in lower-cost US secondary markets such as Texas, North Carolina, Indiana and Ohio. They are increasingly recruiting local university graduates and US permanent residents. These tech giants are now diluting their visa-holder employee strength below the 50 per cent threshold.Moreover, Indian professionals account for approximately 77.6 per cent of all H-1B extensions, making them disproportionately impacted by expanded visa fees, according to Lakshmi Iyer, Chief Client Officer & chairperson of StudyIn India.According to USCIS data, top Indian IT services companies such as TCS had 4,450 H-1B beneficiaries approved in FY26, followed by Infosys with 4,113, Cognizant with 3,510, LTM with 1,289 and Wipro with 1,175. In FY25, TCS led with 6,126 approvals, followed by Cognizant at 3,172, Infosys at 2,856, LTM at 2,207, and Wipro at 1,803.“With an annual impact of $200-250 million, India’s $283 billion IT and business process outsourcing industry faces significant disruption as companies absorb additional recurring costs. This threatens India’s largest export revenue source and limits career prospects for talented Indian professionals,” Iyer said.Even as US employers legally bear visa fees, Indian IT companies ultimately absorb these recurring costs, disrupting business continuity for onshore projects.Moreover, Indian nationals account for 71 per cent of approved H-1B petitions, making cost-sharing inevitable through reduced hiring or benefit adjustments. The cost burden ultimately falls on India’s economy through lost remittances and reduced opportunities. Rising costs are pushing Indian IT firms towards greater local hiring in the US, while expanding offshore delivery hubs in countries such as Canada. The shift is also driving a “reverse brain drain”, bringing talent and capital back to India and supporting domestic growth and innovation.Sajai Singh, Partner, JSA, echoed this, adding that potential rollbacks or tighter enforcement surrounding post-employment grace periods increase employee anxiety and reduce worker mobility, as visa holders grow hesitant to switch employers due to heightened legal and deportation risks. This means multinational and IT-reliant corporations are increasingly diversifying their footprints by shifting or expanding operations into talent-dense hubs including India, which could work in the country’s favour.Published on August 11, 2026