This report is from this week’s edition of CNBC’s “Inside India” newsletter, which brings you timely, insightful news and market commentary on the emerging powerhouse. Like what you see? You can subscribe here.
The big story
Lately, every move out of Washington seems to send aftershocks straight to New Delhi.
The latest shake-up? A $100,000 one-time fee on new H-1B visa applications, courtesy of U.S. President Donald Trump. It’s a bold move aimed at tightening immigration — and it hits Indian tech talent the hardest.
This comes right after Trump slapped additional 25% tariffs on Indian imports last month for buying oil from Russia, bringing total levies to as much as 50%. Trade and immigration have turned into flashpoints under Trump, and India, once , is feeling the heat.
Indians make up around 71% of H-1B holders. New Delhi said the proposed changes have “humanitarian consequences” for the disruption caused to families.
U.S. businesses are caught in the crossfire too. More than half of approved visas are issued to people engaged in computer-related work, according to Pew Research, which means it’s not just Indian tech talent that will be harder to come by for those firms.
President Donald Trump takes a question from a reporter before signing executive orders in the Oval Office at the White House on September 19, 2025 in Washington, DC.
Andrew Harnik | Getty Images
Opportunities in a crisis
Restrictions can backfire and breed resilience.
Just look at China. U.S. chip export bans didn’t kill its artificial intelligence ambitions — they fueled advancements in the field. Case in point: China’s DeepSeek model R1 performed better than OpenAI’s GPT-4o, according to third-party tests, but was trained on Nvidia’s less-advanced H800 chips at a fraction of the cost.
Could India’s tech ecosystem follow a similar path if the door to the U.S. starts to close for Indian talent? It is a possibility.
“What this policy will create are incentives for offshore economic activity,” said Steven Durlauf, a professor at the University of Chicago Harris School of Public Policy. He added that steep H-1B visa fees will discourage U.S. companies from hiring the most talented members of the global labor force.
Governments worldwide are already seizing the opportunity to attract skilled workers to their countries.
Outsourcing goes in-house
For India, the new H-1B fee regime is expected to boost interest in global capability centers (GCCs), especially among mid-market U.S. firms facing higher costs and uncertainty in bringing talent onshore, said Aditya Mehta, a business specialist at audit firm RSM US, who specializes in helping U.S. companies set up such centers.
In its simplest form, GCCs are remote offices set up closer to tech talent pools and staffed by international employees, leading to cost savings. Think long-distance relationships, but the corporate version.
U.S. companies and Indian tech talent have been intertwined for more than four decades. What started as U.S. companies outsourcing their support operations to third-party firms in India has evolved into a more integrated system today.
A GCC is the “other side of outsourcing, it represents insourcing,” says Vikram Ahuja, co-founder of U.S.-based ANSR, a consultancy firm.
Imagine an American bank wants to establish operations in a new geographic area. This involves dealing with multiple vendors of IT software, setting up a cloud network and a whole host of tech integration.
This is where the bank’s GCCs steps in, explained Amar Kalvikatte, a veteran tech professional with over two decades of experience, currently working in Europe for a U.S. tech company.
Given the complex level of tech integration required by businesses today, setting up an extended office in a GCC is a better option than hiring a third-party integration specialist firm, he said.
A third-party tech integration firm might deploy more resources than needed to inflate bills. But since the staff in GCCs are employees of the company, there is a higher level of accountability and ownership, Kalvikatte added.
As global businesses cut their reliance on third-party firms for integration and digital transformation jobs, GCCs are already a growing space.
More than 1,600 GCCs are operating out of India, employing over 1.7 million people, Rajat Dhawan, managing partner for India at global consulting firm McKinsey, told CNBC in an earlier interview.
Fewer than 30 % of Fortune 500 companies have GCCs in India, leaving room for expansion, said ANSR’s Ahuja, who added that his firm forecasts the number of such centers to rise by 60% in the next two to three years.
According to Indian real estate consultancy firm Anarock, GCCs leased 38% of the total office supply in seven major cities in India over the last two and a half years.
“Besides just back-office roles, many have moved into innovation, R&D, product engineering, AI, etc. Therefore, with new visa rules in place, multinationals may not really find it difficult to scale up in India as they don’t need to really build from scratch,” says Peush Jain, managing director, commercial leasing and advisory, at Anarock.
Big tech companies such as Google, Microsoft and Amazon, as well as top financial firms JPMorgan, Goldman Sachs and HSBC have some of the largest presence in the Indian GCC space.
India’s tech dream boomerangs
More than half of all new, first-time H-1B visa applications in FY24 were by Indians, according to a Department of Homeland Security report. That amounts to some 80,000 talents seeking opportunities in the U.S.
IT and big tech companies have been reducing their reliance on H-1B visas in the last few years, according to Indian broker Kotak Institutional Equities. After peaking between 2020 and 2022, new H-1B visa approvals for most U.S. tech giants and Indian IT firms declined.
New H-1B visa approvals for Amazon fell 37% in 2024 from a peak of 6,152 in 2021. Indian software and services giant, Tata Consultancy Services’ new visa applications halved from its peak of 3,062 in 2021.
Experts say that these numbers reflect the efforts of Indian IT companies to hire local talent and U.S. big tech companies setting up GCCs closer to talent pools, such as India.
GCCs, which currently employ a million and a half people in India and are growing at a double-digit pace, will be able to absorb this reverse flow of talent to India as firms face shortages in areas tied to digital transformation.
The most acute demand for talent in GCCs is in AI, data and analytics, where the talent shortfall is as high as 42%, says Kapil Joshi, CEO of IT staffing at hiring consultancy firm Quess Corp. Talent for platform engineering, cybersecurity, and cloud infrastructure is also scarce, he added.
For decades, the American Dream of Indian techies fueled not just Silicon Valley’s rise but also a parallel growth spurt in India, as third-party IT service firms scaled up and Indian tech talent migrated overseas.
What started as an outsourcing jobs boom in India in the late 90’s evolved into software service companies and eventually into coding hubs.
This boom also led to the rise of the Indian middle class, and urban centers such as Bengaluru, Hyderabad, Chennai and Pune prospered thanks to the IT industry.
While Washington’s latest barriers might cause disruptions, they would only bring India’s tech story full circle: from outsourcing to insourcing.
Top TV picks on CNBC
Anand Gupta, lead portfolio manager at Allianz Global Investors, said Indian earnings are on track for a reacceleration.
Sajjid Chinoy, head of Asia economics at JPMorgan, said India is likely to benefit from the increase in U.S. H-1B visa fees in the medium term despite an initial hit, as visa restrictions have historically encouraged firms to offshore more vigorously.
Sam Konrad, Jupiter Asset Management’s Asian equity income investment manager, explained why India is ‘the most attractive emerging market’ in the world.
Need to know
Investors are turning bullish on India. After a year of underperformance against other emerging markets, the recent valuation correction and promising macro conditions are making Indian equities attractive.
India’s 18-billion-dollar bet on semiconductors. India aims to reduce its dependence on imports, secure chips for strategic sectors, and capture a larger share of the global electronics market, shifting away from China.
India to begin production of AK-203 rifles with Russian help. Prime Minister Narendra Modi on Thursday said that India will start the production of AK-203 rifles in Uttar Pradesh with the help of Russia.
Quote of the week
So even though the H-1B visa may cause a hit in the near term, to the extent that it causes more multinational firms to offshore, more broadly, India, as one of the recipients of those after offshoring, will stand to benefit in the medium term.
— Sajjid Chinoy, head of Asia economics, JPMorgan
In the markets
India’s Nifty 50 index was trading 0.66% lower as of 4:30 p.m. local time, while the 30-stock BSE Sensex was down 0.68%. The indexes have gained 5.31% and 3.9%, respectively, so far this year.
The benchmark 10-year Indian government bond yield was trading flat at 6.485%.
Coming up
Sept. 26: Pace Digitek to launch its IPO
Sept. 29: India Index of Industrial Production data for August
Oct. 1: Reserve Bank of India’s monetary policy meeting
Each weekday, CNBC’s “Inside India” news show gives you news and market commentary on the emerging powerhouse businesses and the people behind their rise. Livestream the show on YouTube and catch highlights here.
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