Amid Trump's H-1B Visa Fee Shock, Silicon Valley Hiring In Turmoil As Companies Eye Offshoring

(MENAFN- Live Mint) The Trump administration's hefty $100,000 fee, which applies to new H-1B visa applicants, has stirred high-level talks in Silicon Valley and beyond, as the sharp jump from just a few thousand dollars triggered panic.

However, the fee hike, which was intended to protect American jobs, is having the opposite effect. Some companies are now considering moving more jobs overseas to offset the impact.

United States President Donald Trump on Friday announced the change to the visa program that has long been a recruitment pathway for tech companies and encouraged international students to pursue higher education in America, Reuters reported.

Impact on companies and employment

The steep visa cost has already forced companies to pause and re-evaluate their recruitment, budgeting and workforce plans.

According to company founders, venture capitalists and immigration lawyers who work with technology companies, the new fee is simply 'unworkable' in the US.

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“It's time for us to start looking for other countries where we can have highly skilled talent,” said Chris Thomas, an immigration attorney at Colorado-based law firm Holland & Hart.

According to Pew Research, around 141,000 new applications for H-1B were approved last year. Though Congress caps new visas at 65,000 a year, total approvals run higher because petitions from universities and some other categories are excluded from the limit, Reuters reported.

India may benefit from the fee hike

Experts and executives told Reuters that the new $100,000 fee makes hiring talent in countries like India more attractive, as wages in the country are lower, and Big Tech now builds innovation hubs instead of back offices in India.

“We probably have to reduce the number of H-1B visa workers we can hire,” said Sam Liang, co-founder and CEO of popular artificial intelligence transcription start-up Otter.“Some companies may have to outsource some of their workforce. Hire maybe in India or other countries just to walk around this H-1B problem.”

The disproportionate effect on startups

While large technology companies may be able to absorb the new fee, it poses a major challenge for smaller companies and startups with small teams and a dependence on cash.

Unlike large technology companies whose compensation packages are a combination of cash and stock, pay packages of startups typically lean towards equity as they need cash to build the business, Reuters reported.

Also Read | Immigration lawyers confident Trump's H-1B blow will run into judicial obstacles

Deedy Das, a partner at venture capital firm Menlo Ventures that has invested in startups such as AI firm Anthropic, said,“For larger companies, the cost is not material. For smaller companies, those with fewer than 25 employees, it's much more significant,” adding that big tech CEOs were already prepared for this and will pay as for them, fewer small competitors is an advantage.

Innovation at risk

Analysts and industry leaders are concerned that the new visa policy could harm innovation in America.

According to a report quoted by Reuters, many successful US startups valued at $1 billion or more had at least one immigrant founder. The high cost of the H-1B visa could deter some of the world's most talented immigrants from coming to the US and launching new firms.

Also Read | H-1B visa fee hike a negative, but a bigger threat looms over Indian IT firms

If the policy is not diluted soon, then“We will see a pullback from the smartest people around the world,” Bilal Zuberi, founder of Silicon Valley-based venture capital firm Red Glass Ventures, who began his career in the US on an H-1B visa, told Reuters.

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