New $100K H-1B visa fee to cost US tech billions, push innovation offshore

The new H-1B visa fee to sponsor workers in the US will create an annual multi-billion-dollar annual burden for the tech industry and likely drive tech innovation shifts to India, Eastern Europe and Latin America as companies redirect investments, according to new research.

Earlier this month, President Donald J. Trump announced a presidential proclamation reform to the H-1B visa program: every new H-1B visa petition must include a one-time, $100,000 fee per sponsored worker. The fee applies only to new petitions — not renewals or current visa holders.

The H-1B visa is a non-immigrant visa that allows US employers to hire foreign workers in specialty occupations (such as tech, engineering, finance). Each year, the program brings in 85,000 high-skilled high-paid professionals to help power the US economy.

With the new fee, the high cost of H-1B talent in late 2025 and 2026 will likely force employers to scale back their use of cross-border talent and – perhaps — projects, experts say.

The new H-1B fee is more than 130 times what the old base fee had been ($215-$780) and now accounts for more than 95% of the total application cost — rendering the old filing fees nearly insignificant when compared to the new charge. “For tech companies, this is more than just another fee. It takes billions away from areas like product development, hiring, and innovation,” said Gianluca Ferruggia, general manager at DesignRush, a talent outsourcing platform.

Historically, about 60% to 70% of H-1B approvals have gone to tech jobs such as software engineers and data specialists. That means the new fee will fall hardest on the technology sector.

At the new fee level, that equals $5.5 billion per year just for tech hires, excluding the $100 million already spent on registrations that never make it past the lottery phase, according to a newly released DesignRush study. It showed the new H-1B fee would be a “game-changer” for US tech hiring, reshaping Q3 plans this year, affecting broader talent strategies, and boosting global employment hubs.

“Larger companies might absorb these costs, but for smaller firms and startups, it could mean fewer opportunities to bring in the talent they need to grow,” Ferruggia said.

All US tech companies, from small startups to Fortune 500 giants, will need to reconsider their hiring strategies, including options like Employer of Record (EOR), Business Process Outsourcing (BPO), and hybrid hubs. (EOR firms, like DesignRush and Atlas, are third parties that employ workers on behalf of another company.)

“For 25 years, US tech has imported talent through H-1B visas. But with the new $100K H-1B salary threshold, the rules of the game just changed, and every US tech firm is now re-thinking how they source talent,” Ferruggia said.

For many firms, the H-1B change isn’t just another fee — it diverts billions of dollars that would otherwise be spent on hiring and innovation. Big companies might be able to manage that shift, but startups could lose key talent they need to grow, according to Ferruggia.

Enterprise firms are already setting up in global tech hubs; startups and growth companies are turning to EOR services for compliant, distributed workforces. “This isn’t just about immigration; it’s about the future of how companies build global teams. EOR is on track to become the default option worldwide, reshaping the very definition of ‘where work happens,’” Ferruggia said.

Jim McCoy, CEO of EOR firm Atlas, said the H-1B change will likely shift US firms toward “distributed global workforces.”

“It will also force companies to look at their comp and benefits strategies to address some of the retention issues that may arise in distributed and hybrid teams,” McCoy said.

Currently, H-1B workers must be paid the “prevailing wage” for their job and location, according to the US Department of Labor. These wages vary based on the role, experience level, and region, and can be significantly lower than $100,000 in many cases.

While some Indian leaders frame the proposed $100,000 H-1B visa fee as a potential windfall for that nation’s domestic economy — arguing it could redirect top talent and investment back home — others warn that the country may not yet be equipped to fully absorb an influx of highly skilled professionals.

Srividya Jandhyala, an associate professor at ESSEC Business School in Paris, said the H1-B application fee has sparked fear and confusion among foreign workers. It also sent the companies who employ them scrambling.

“Over the years, many of the largest IT, financial, and business services companies have tried to diversify their markets. But the US remains the dominant export destination, making these companies vulnerable,” Jandhyala said. “To the extent that American companies have global capability centers and other service operations in India, they might act as a buffer against rising tariffs in the service sector.”

McCoy said employers, especially start-ups and enterprise tech firms, will immediately rethink hiring strategies. The new normal demands intentional planning: hiring and developing talent for both now and the future, rethinking communication, using learning tools to support innovation, and shifting from centralized HQs to more accessible regional hubs.

“This could drive up competition for talent not requiring visas, but it is also likely to lead employers to evaluate offshore hiring options that will give them access to the critical talent they need,” McCoy said.

He recommends that his clients evaluate total employment costs — factoring in regulations, market conditions, and location — so they can adapt hiring and compensation strategies in real time to stay competitive.

Jack Gold, principal analyst with tech industry research firm J. Gold Associates, was blunt about the new H-1B fee, calling it “a terrible move by the US.”

“I assume Trump is making this policy to try and limit or even eliminate new H-1B visa holders for tech…, but if this passes through and the tech companies cut their hiring as a result, which is pretty likely, there is going to be real harm done,” Gold said.

Trump believes companies use H-1B visas to cut costs, but the reality is there aren’t enough qualified American tech workers to fill all roles, according to Gold. Limiting H-1Bs could hurt US tech by delaying product cycles, weakening support, and giving foreign competitors an edge. It could also push companies to offshore more work — undermining the very goals the policy aims to achieve.

“At the end of the day, we should be putting in place programs that stimulate the STEM education in this country to get more Americans able to participate in the high-tech economy,” Gold said. “This policy will likely have the opposite effect, as companies will react by exporting more jobs. And that’s bad for the long term health of our economy.”New $100K H-1B visa fee to cost US tech billions, push innovation offshore – ComputerworldRead More