Morningstar

IT Services: New $100,000 Fee for H-1B Visas Can Severely Restrain Onshore Delivery Capability

We think the new fee would severely limit the scale of offshore labor to work on US-based projects, leading to higher costs.

In this photo illustration, the Cognizant Technology Solutions Corporation logo is seen displayed on a smartphone screen.
Thomas Fuller/SOPA Images via Getty

Bloomberg reported on Sept. 19 that President Donald Trump is expected to announce a new $100,000 fee on H-1B visa applications. Shares are down up to 5% for IT-services providers with high offshore leverage, including Cognizant, Infosys, and Wipro.

Why it matters: IT-services firms with large labor pools in India use the H-1B visa as the main pathway to bring lower-cost labor for on-site work in the United States. We think the new fee, once in effect, would severely limit the scale of offshore labor to work on US-based projects, leading to higher costs.

  • As more US companies begin to adopt agentic artificial intelligence, demand for onshore system integration projects is poised to grow. We think it’s unlikely for IT-services firms to find an alternative method in the short term that caters to a similar scale of engineers’ cross-border movement.
  • However, we do not view the new fee as a headwind for IT providers’ business process outsourcing services, as the labor force should be able to accomplish the work from offshore delivery centers without entering the US.

The bottom line: We maintain our fair value estimates for wide-moat TCS, wide-moat Infosys, narrow-moat Cognizant, and narrow-moat Wipro, before we learn more details about the new policy, including the scope and timeline, and management’s mitigation plans.

  • We recently identified the US government’s recent immigration policies as a risk source for IT-services firms that leverage low-cost offshore labor. Before introducing the $100,000 fee, the Trump administration had already lifted the H1-B registration fee to $215 from $10 to combat visa abuse.
  • The new fee can also potentially lead us to reevaluate the cost advantage that TCS and Infosys currently enjoy. We do not expect the policy to alter their cost structures in the short term.

Key stats: Cognizant, TCS, and Infosys are among the top 10 H-1B visa sponsors nationwide, acquiring a total of 21,734 (over 25%) of the 85,000 H-1B visas issued in 2025.

Editor’s Note: This analysis was originally published as a stock note by Morningstar Equity Research.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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