Spotlight on IT companies as Trump imposes USD 100,000 fee for H1B visas

Washington DC [US], September 20 : US President Donald Trump on Friday (local time) issued a new presidential proclamation titled "Restriction on Entry of Certain Nonimmigrant Workers" that introduces a major overhaul to the H-1B visa programme, imposing a steep USD 100,000 annual fee on H-1B visa applications, raising fresh questions about whether this is a much-needed correction or a potentially crippling blow to America's tech talent pipeline.

Set to take effect on September 21, the proclamation represents one of the Trump administration's most aggressive efforts yet to overhaul the H-1B visa programme. Framed as a crackdown on "systemic abuse", it places strict financial and compliance burdens on companies seeking to hire skilled foreign workers, especially in the technology and IT sectors.

The administration insists the intent is to restore integrity to a programme originally designed to bring in "top-tier global talent" on a temporary basis. Instead, it argues, the H-1B system has been hijacked by outsourcing firms to displace American workers, depress wages, and even create national security risks.

Data cited in the proclamation backs these claims; the number of foreign workers in STEM (science, technology, engineering, and math) fields more than doubled between 2000 and 2019, while total STEM job growth lagged. In the computer and math sector alone, the foreign workforce jumped from 17.7 per cent in 2000 to over 26 per cent by 2019, a rise the administration blames primarily on the H-1B system.

According to the order, IT firms now dominate the programme, with the share of H-1B approvals going to tech workers rising from 32 per cent in FY 2003 to over 65 per cent in recent years. Many of these firms, the administration notes, have simultaneously laid off American employees while ramping up their H-1B hiring.

"Information technology (IT) firms in particular have prominently manipulated the H-1B system, significantly harming American workers in computer-related fields. The share of IT workers in the H-1B program grew from 32 percent in Fiscal Year (FY) 2003 to an average of over 65 percent in the last 5 fiscal years. In addition, some of the most prolific H-1B employers are now consistently IT outsourcing companies. Using these H 1B-reliant IT outsourcing companies provides significant savings for employers: one study of tech workers showed a 36 percent discount for H-1B "entry-level" positions as compared to full-time, traditional workers. To take advantage of artificially low labor costs incentivized by the program, companies close their IT divisions, fire their American staff, and outsource IT jobs to lower-paid foreign workers," the proclamation read.

The proclamation also cites real-world cases where American workers were not just laid off but forced to train their foreign replacements and sign non-disclosure agreements as part of severance packages, highlighting, in the administration's view, a systemic abuse of the visa system.

"The high numbers of relatively low-wage workers in the H-1B program undercut the integrity of the program and are detrimental to American workers' wages and labor opportunities, especially at the entry level, in industries where such low-paid H-1B workers are concentrated. These abuses also prevent American employers in other industries from utilizing the H-1B program in the manner in which it was intended: to fill jobs for which highly skilled and educated American workers are unavailable," the order read.

For American college graduates, particularly in computer science and engineering, the implications are grim. Jobless rates in these fields reportedly exceed 6 per cent, higher than many non-STEM disciplines. The administration argues that flooding the job market with cheaper foreign labour has discouraged Americans from pursuing careers in tech while also stifling wage growth and advancement.

Beyond the economic considerations, the proclamation also addresses national security concerns. It references investigations into H-1B-heavy outsourcing firms for visa fraud, money laundering, and violations under the Racketeer Influenced and Corrupt Organisations (RICO) Act. The administration warns that this reliance on low-wage foreign labour risks eroding America's long-term technological leadership and national resilience.

"The abuse of the H-1B program is also a national security threat. Domestic law enforcement agencies have identified and investigated H-1B-reliant outsourcing companies for engaging in visa fraud, conspiracy to launder money, conspiracy under the Racketeer Influenced and Corrupt Organisations Act, and other illicit activities to encourage foreign workers to come to the United States," it read.

Under the new rules, employers must show proof of payment of the USD 100,000 fee when filing H-1B petitions.

Both the US Department of Homeland Security and the State Department are tasked with enforcing compliance and denying entry to any H-1B worker whose sponsor fails to pay.

The order also calls for future rulemaking to revise prevailing wage standards, ensuring that only high-skilled and high-paid individuals are prioritised for entry, consistent, the administration says, with the programme's original intent.

However, limited exemptions are possible. The Secretary of Homeland Security may waive the restriction for individuals or companies where the employment of H-1B workers is deemed to be in the national interest and poses no threat to US security. Still, such exceptions are expected to be rare and subject to strict scrutiny.

Critics of the proclamation warn that while efforts to eliminate fraud are welcome, such sweeping financial barriers may deter legitimate talent and hinder innovation, especially in industries where foreign expertise has been central to the US's technological dominance.

Whether the measure delivers on its promises to protect American jobs or ends up driving talent and investment elsewhere remains to be seen. But one thing is clear: the Trump administration is betting that a more restrictive, high-cost immigration policy will force a reset in how the US balances foreign expertise with domestic job security.

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