The U.S. president’s order on Friday—which requires a $100,000 fee for H-1B applications—will force a rethink at Indian outsourcers led by Tata Consultancy Services Ltd. and Infosys Ltd., who use the program to deploy tens of thousands of engineers across American clients from Citigroup Inc. to Walmart Inc. The two Indian software exporters’ shares slid more than 3% on Monday.

The abrupt move—a response in part to accusations of abuse—forces Prime Minister Narendra Modi to once again deal with the fallout from America First policies. Companies from TCS to Wipro Ltd. have been hailed as a touchstone of Indian technological achievement, helping create high-skilled jobs for the world’s most populous economy since the idea of outsourced information technology gained currency around the 1990s. Trump deals a blow to some of India’s most valuable companies at a time they’re grappling with IT cutbacks because of geopolitical and economic uncertainty.

Trump’s move is a “geopolitical turf war,” said Chander Prakash Gurnani, the former chief executive officer of Tech Mahindra Ltd., who now runs an AI firm. “We’re only helping America. And we’re helping American companies be more competitive.”

“In the short run, the next 12 months, there is a shock,” he told Bloomberg Television, emphasizing however that TCS and its rivals have in some ways anticipated a longer-term shift away from the U.S. “The business model, and the global delivery model, are changing and we live in a very dynamic world.”

The changes to the visa policy increased strains on the India-U.S. relationship on the eve of the Indian team’s visit to Washington as the countries seek a breakthrough on trade talks. They also add to a wave of anti-immigration movements across the globe that have impacted the nation of 1.4 billion people.

In India, social media erupted with responses that ran the gamut from outraged to panicked and accusatory. Many worried about the impact on families who rely on H-1Bs to work and stay in the U.S. as well as their relatives in India who they often send money to.

The H-1B visa program is used heavily by Indian outsourcing firms as well as the U.S. tech sector to bring in skilled workers from abroad. Finance companies and consulting firms also use the program, which makes tens of thousands of visas available via a lottery. The Trump administration cast the changes as part of a broader plan to bolster legitimate applications while weeding out abuses.

H-1B visas are awarded based on a system where employers file petitions by March for a lottery in April, with 65,000 visas available plus 20,000 for U.S. master’s graduates. In 2025, over 470,000 applications were submitted. Many firms submit multiple registrations for the same workers to improve their odds at the lottery, a Bloomberg News investigation previously found.

The new $100,000 payment would be in addition to current fees, which are more modest. Fees directly tied to the H-1B visa application currently include a $215 fee to register for the lottery alongside various filing fees.

Indian-born workers accounted for 72.3% of all H-1B beneficiaries in the U.S. fiscal year to September 2023, which includes initial and continuing employment. Infosys got approval for initial employment of 2,504 H-1B visas in FY2024. Under the new rules, that would cost at least $250 million.

As recently as July, Indian Commerce and Industry Minister Piyush Goyal had said immigration rules—including those around H-1B visas—had not come up in U.S. trade talks. Opposition lawmakers were quick to blame Modi for Trump’s decision on the H-1B fee hike, saying the government has failed once again to protect Indian interests.

In a televised address to the nation Sunday, Modi spoke about a reduction in consumption taxes, but didn’t make mention of the visa changes. India’s foreign ministry on Saturday said the local tech industry and the U.S. are expected to consult on the path forward.

While Trump aims to protect U.S. jobs by restricting immigrant inflows, the new rules could backfire: they will likely raise costs for American corporations and push them to step up the expansion of their so-called global capability centers in India. Companies including Microsoft Corp., Google, Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley already run large GCCs in India.

“If American companies cannot outsource onshore, they may look to expand their offshore presence in places like India, even with a possible fee hit,” said Bhaskar Rao, CEO of communications company Digital Sea. “The decision is clearly targeted to keep Trump voters happy, but it remains to be seen whether they can replace nearly 65,000–85,000 junior and mid-level professionals affected by the H-1B cap.”

The order, which took effect Sunday, is already drawing criticism for flouting clear requirements of U.S. federal immigration law and is likely to invite immediate lawsuits. The lack of clarity around the new rules prompted Microsoft, Amazon.com Inc. and Alphabet Inc.—some of the biggest beneficiaries of the H-1B program—to initially warn employees against foreign travel. 

“The main issue with such decisions is that they create a lot of uncertainty in the business environment,” said Arup Raha, a Singapore-based independent economist. “Such a supply-side shock” isn’t in U.S. interests either, he said.

Indian firms such as TCS, Infosys and HCL Tech Ltd. have steadily pared back their dependence on H-1B visas since Trump threatened to raise immigration barriers in his first term and a bulk of projects was done remotely at the height of the coronavirus pandemic. All major IT companies have also stepped up local hiring and ramped up so-called delivery centers in the U.S. to service clients.

Still, the H-1B remains critical to Indian IT firms— t helps maintain key client relationships in their biggest market, and allows engineers to be stationed on the ground for sensitive projects in the U.S. The increased visa costs will force them to fly even fewer workers to client sites. Infosys employs thousands of people across its delivery centers in states including Texas, Indiana, and North Carolina.

“The move will almost certainly be challenged in court, and there will be considerable pressure from the tech industry to reverse it,” Digital Sea’s Rao said. “Nothing is final with Trump.”