U.S. government data (PDF) show that in 2023 a newly approved H-1B visa worker with the most common qualification—a bachelor's degree in computer science or engineering—earned a median salary of $99,000. By contrast, the cost of securing that visa was already high. The application fees in 2024 were between $3,500 and $6,000, and once lawyers and compliance expenses were added, the estimated first-year cost reached more than $9,000.
Against this backdrop, this month's announcement that the visas would preferentially be allocated by lottery to the applicants with higher earnings and that the application fee would jump to $100,000 amounts to what many in industry see as a shutdown penalty.
Of all countries, India is most exposed: it accounts for over 70 percent of the 85,000 H-1B visas issued each year, overwhelmingly in the software sector. If the same number of visas were sought in 2026, employers would collectively spend $60 billion just to bring Indian software engineers onshore. That represents half of India's entire software export revenue from the United States in 2024—far more than the 25 percent gross margins the strongest firms typically report.
Who will actually pay these costs? India's software sector shows a clear divide. At one pole are massive outsourcing firms such as TCS, Infosys, and Wipro (along with U.S.-based consultancies like IBM and Accenture). Their core business is application development: coding to client specifications, increasingly done with standardized tools or generated by AI. These firms operate on thin margins and compete relentlessly on cost. At the other pole are smaller, higher-value firms—often linked to U.S. technology companies such as Amazon, Meta, and other product developers—working on advanced software architectures and hardware design.
For the first group, even the older $9,000 per worker fee became unsustainable. Between 2021 and 2024, the largest Indian companies slashed visa use by nearly half. Infosys, which once had more than 15,000 H-1B staff in the U.S. in 2010, employed fewer than 2,000 by 2024. By contrast, Amazon alone petitioned for over 10,000 workers from India in 2024.
The official rationale for the new policy is that it would restore the spirit of the 1952 and 1990 Immigration Acts. The modern H-1B visa traces its roots back to the 1952 Immigration Act clause 101(a)(15)(H)—which gave the H visa its name—allowing temporary entry for the person who is “of distinguished merit and ability and who is coming temporarily to the United States to perform temporary services of an exceptional nature requiring such merit and ability.” Originally, applicants had to hold foreign residency and declare they had no intention of staying permanently. In 1990, Congress eliminated those requirements and broadened eligibility, defining “distinguished merit and ability” by the holding of at least a bachelor's degree. At the time, only 20 percent of Americans had such a credential. Today, that share has doubled to 40 percent, eroding the distinction.
Tariffs are percentage-based and maintain proportionality, while the H-1B visa carries a fixed fee, which by design excludes all but the highest-value roles.
In practice, the H-1B became a tool for labor arbitrage—importing skilled services at lower cost. Policymakers argue that if tariffs are legitimate to counter cheap physical goods, a service-sector equivalent is justified. But there is a key difference: tariffs are percentage-based and maintain proportionality, while the H-1B visa carries a fixed fee, which by design excludes all but the highest-value roles. That will shrink the program to niche use by elite engineers—especially product designers—many of whom could in any case secure permanent employment through other U.S. residency avenues, and a lottery would be unnecessary. Ironically, this would return the H-1B closer to its pre-1990 profile, when it served mainly as a visa for exceptional individuals rather than a mass hiring channel for large corporations.
American trade policy has long sought to ensure goods consumed domestically are produced domestically. With the $100,000 fee, that same principle is now being extended to services—at some risk of retaliation given that the United States holds a surplus in services exports with most countries. By pricing out volume hiring, the government is effectively telling the software industry that code meant for American clients should be written by American talent.
The H-1B visa, once the principal gateway for importing talent at scale, may be on the verge of becoming a legacy route—an expensive instrument reserved only for the rare, “distinguished” developer who fits the description envisioned more than 70 years ago.
