The recent steep hike in US H-1B visa fees is likely to significantly impact Indian IT service providers, experts and industry insiders have warned. The Indian IT industry, which heavily relies on H-1B visas to bring tens of thousands of highly skilled workers to the US, is expected to face substantial financial strain due to the increased costs.

In April, the US Citizenship and Immigration Services (USCIS) implemented a series of fee increases, including a 2050% rise in the registration fee to $215 from $10 and a 70% increase in the application fee to $780 from $460.

Additionally, a $600 asylum fee was added to the H-1B and other petitions, which experts argue is unrelated to non-immigrant work visas like the H-1B. Shivendra Singh, vice president of global trade and development at Nasscom, described these changes as making business operations more difficult.

According to the National Foundation for American Policy, the total cost for employers could exceed $33,000 in legal and government fees for each H-1B visa petition for initial employment or extensions. Jonathan Wasden, managing attorney at Wasden Law, suggested that the high costs might force Indian IT companies out of the visa process, as they typically file multiple petitions due to short-term contracts, unlike companies like Apple or Google that file less frequently.

Wasden indicated that USCIS has long aimed to reduce Indian IT companies' participation in the H-1B program, with the new fee structure being the latest strategy to achieve this. The elevated costs could make it unsustainable for companies involved in third-party placements, potentially driving them out of business.

Nasscom's Singh expressed concerns over the significant rise in filing fees at a time when there is a high demand-supply gap in skilled labor. He warned that increasing costs could hinder the ease of doing business and negatively affect the competitiveness of the US economy. Additionally, proposed rule changes to narrow the criteria for ‘specialty occupations’ and H-1B employees staffed at third parties could further exacerbate the situation.

Some experts believe that the fee hikes will lead to a decrease in H-1B visa usage over time, while others argue that companies will continue to bear the costs to secure necessary skills. Cyrus Mehta, managing partner at Cyrus D Mehta & Partners PLLC, noted that Indian heritage companies are already absorbing the increased fees as a business necessity in the US.

However, he also highlighted that the fee burden will be particularly challenging for H-1B extensions for India-born workers stuck in green card backlogs.