From Innovation Hubs to Policy Hurdles: The 2025 H-1B Visa Shakeup and Its Impact on Indian Professionals

The H-1B visa program started with the Immigration Act of 1990. This law created a type of visa that lets U.S. companies hire foreign workers in jobs that need at least a college degree or something similar in areas like science, technology, engineering, and math. At first, there was a limit of 65,000 visas each year. The goal was to fill gaps in skilled workers needed in the American job market.

Illustration by The Geostrata

Over time, most of the H-1B visas went to people from India. Nearly 70% of the visas each year were given to Indian workers. This happened because India has a lot of engineering schools, and they produce numerous literate folks who speak English and are good at technology and IT. A lot of these people started their journey by studying in the U.S., and then worked through a program called Optional Practical Training, which often led to H-1B visa opportunities.

Before 2025, the cost of getting an H-1B visa was not too high, so many different kinds of companies could apply to big tech companies, small startups, and consulting firms. Even though there were not enough visas and the selection was done by chance, this system offered many young Indian professionals and graduates a chance to live, work, and build their careers in the United States.

For the 2025 fiscal year, that limit was hit on December 2, 2024. In 2014, seven of the top ten companies that got the most H-1B visas were either Indian or started in India. But by 2024, that number had gone down to just four. The Indian community in the U.S. has a big effect on the economy and society.

There are about 5.1 million Indian-Americans, which is around 1.5% of the U.S. population. But they contribute a lot more than their numbers suggest to the economy and innovation. They pay between 5% to 6% of all U.S. income taxes, which adds up to about $250 to $300 billion every year, way more than their population size would suggest.

In 2024, more than 70% of all H-1B visas went to Indian citizens. They work in many fields, including tech and medicine. Chinese citizens got the next highest number, but that was less than 12%. Indian-origin individuals have established or co-founded 72 out of the 358 unicorn startups in the U.S., collectively valued at nearly $195 billion and employing over 55,000 people.

These entrepreneurs have been pivotal in advancing technological innovation, from Silicon Valley to pharmaceutical labs, and across areas like cloud computing and artificial intelligence. Indian-Americans hold leadership positions in major companies, including CEOs of Google(Sundar Pichai), Microsoft (Satya Nadella), and Adobe (Shantanu Narayen).

THE ROLE OF FOREIGN WORKERS IN U.S INNOVATION

Statistics plays a crucial role in various aspects of life, particularly in the modern era, where data has become increasingly significant. According to a recent report, Silicon Valley's innovation is heavily driven by foreign workers.

Of tech professionals with a bachelor’s degree or higher, 23% are from India, 18% from China, and 17% born in California, as per the 2025 Silicon Valley Index by the Joint Venture Silicon Valley think tank. The proportion of foreign-born tech workers is notably higher than the percentage of foreign-born residents in the region, which reached a record high of 41% in 2023.

The number of science and engineering degrees awarded annually by Bay Area universities has increased by 117% since 2002, with over 21,500 such degrees earned locally in 2023. However, this is still insufficient to meet the demands of the tech industry, which created more jobs than degrees from Bay Area schools by over 20,000 between 2019 and 2023, according to the report.

The presence of abundant venture capital $69 billion invested in Silicon Valley and San Francisco in 2024, adds further appeal for startup founders and entrepreneurs worldwide seeking funding to pursue their innovative ventures, as noted by Hancock.

Venture capitalist Anis Uzzaman, CEO of San Jose-based Pegasus Tech Ventures and chair of the annual Startup World Cup, emphasizes that foreign-born tech workers are essential "key ingredients" for Silicon Valley's startups and established companies.

Many economists argue that new employment prospects for native-born workers are created by the presence of immigrant workers in the United States. There are five ways this happens. First, native-born individuals and those who are immigrants frequently have different skill sets, which means that they work in various kinds of occupations. Instead of vying for the same positions, they thus complement one another in the labour market.

Second, the U.S. economy benefits from the expenditure and investment of immigrant workers' earnings, which boosts consumer demand and generates new employment. Third, rather than looking for fresh prospects elsewhere, firms expand their operations in the United States in response to the presence of immigrant workers and consumers.

Fourth, the U.S. labour market is expanded by immigrants themselves, who often start new firms. Fifth, economic progress is fuelled by the fresh concepts and inventions that immigrants create. According to a recent study, the unemployment rate in a given occupation decreased between 2005 and 2018 when the proportion of workers in that occupation having H-1B visas increased. 

According to a different recent study, U.S. multinational businesses are motivated to reduce the number of positions they offer in the United States by restrictions on H-1B visas, such as increased refusal rates. Rather, the companies create new international affiliates, especially in China, India, and Canada, or expand employment at their current foreign affiliates. 231 enterprises, or 46.2 per cent, of the New American businesses that made the 2025 Fortune 500 list were created by immigrants or their offspring, 109 of whom were immigrants and 122 of whom were the offspring of immigrants.

Ten of the 14 businesses that made their Fortune 500 debut this year were New American businesses, with half of them having been started by immigrants. Furthermore, immigrants or their offspring started 10 of the 22 businesses that were either new to the list or making a comeback after previously appearing.

The economies of the United States and the rest of the world benefit greatly from these New American businesses. Together, they brought in $8.6 trillion in fiscal year (FY) 2024, which is more than the GDP of numerous nations, including the UK, Japan, Germany, and India. Actually, the United States ($28.5T) and China ($18.7T) would have the largest economies in the world, while a nation with a GDP equal to the total revenues of the New American Fortune 500 companies would rank third.

THE 2025 H1B FEE HIKE (POLICY CHANGES AND IMPLICATIONS)

The H-1B landscape underwent drastic changes in September 2025. Beginning on September 21, President Donald Trump announced a one-time $100,000 cost for each new application for an H-1B visa. Compared to the prior fees, which usually varied from $2,000 to $5,000 based on the application type and employer size, this is a significant increase. Although the new policy primarily targets new foreign applications and suspends current visa holders' renewals for the time being, it has far-reaching implications for families and industries.

The recent increase in expenses essentially restricts H-1B sponsorship to large multinational corporations and well-established technology companies that can bear the financial burden. For numerous smaller businesses in both the U.S. and India, particularly those focused on mid-level IT services, product development, or finance, the cost of employing skilled Indian workers now surpasses that of hiring locally.

American companies, already facing a shortage of talent, are compelled to limit H-1B visas to only the most valuable positions, while routine or support tasks are increasingly outsourced to India. The sudden announcement created a wave of uncertainty within the Indian community.

Families hurried to cancel travel arrangements, worried about high reentry expenses and potential job disruptions. Immigration lawyers worked quickly to explain the new rules, while hundreds of thousands of students and skilled professionals aiming for careers in the U.S. now see those dreams put on hold.

Many entry-level tech professionals and students are confronted with a situation where the fee surpasses their first-year income, rendering sponsorship from smaller companies impractical. This issue is particularly severe in the STEM fields and service industries, where Indian talent has historically filled essential roles.

The human impact is evident: families torn apart, important life moments missed, and career aspirations disrupted by sudden policy changes. Experts in economics and industry forecast that this crackdown will accelerate the relocation of jobs from the United States to India.

Rather than sponsoring talent for work in the U.S., American companies are significantly increasing their investments in Indian global capability centres (GCCs), which manage operations ranging from research and development to finance and analytics. With over half of the world's GCCs located in India, the nation is evolving from merely a tech support centre to a global centre for innovation.

As the cost of hiring local talent in the U.S. rises, project execution and delivery are increasingly being transferred to remote teams in India and other regions. The current scenario enhances the Indian industry in the near term and may help mitigate brain drain, but it also introduces new complexities for U.S. companies, such as compliance issues, data security concerns, and managing different time zones. These shifts are transforming labour strategies, altering market dynamics, and possibly changing the economics surrounding innovation.

In light of these developments, the Indian government has positioned the challenge as a domestic opportunity. With increasing U.S. restrictions, India aims to attract those returning home and retain skilled professionals, aspiring to become a hub for innovation rather than merely a source of talent.

The rise in high-value remote work is fueling India’s evolution into a focal point for advanced research, development, and entrepreneurship across various fields, including AI and pharmaceuticals. Indian companies are determined to leverage this disruption as momentum, channelling investments into skill development, infrastructure, and future leadership.

CONCLUSION

The recent decision by the U.S. to implement a $100,000 fee for each new H-1B visa signifies a significant shift with extensive implications. Indian professionals, who account for more than 70% of these visas, are confronted with considerable obstacles, compelling many families and early-career graduates to reconsider their aspirations of living in America.

This fee renders sponsorship unfeasible for smaller businesses and startups, negatively impacting innovation and recruitment in the U.S. While large tech companies may adapt to this change, others may experience talent shortages, leading to a shift toward outsourcing and remote work in India.

As the U.S. risks diminishing its appeal to international talent, India aims to transform this challenge into a chance by developing its own innovation centres and retaining skilled workers. The outcome of these changes, whether it results in difficulties or fresh opportunities, will depend on future reforms and regional collaboration.

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BY SIDDHI KHURANA

TEAM GEOSTRATA

info@thegeostrata.com