How rising H-1B visa costs threaten IT talent strategies

How is the H-1B visa changing?

The H-1B visa program allows 85,000 visas annually through a lottery system. The new policy transforms H-1B visa applications from an affordable lottery system into a premium investment.

Key changes in H-1B visa policy include the following:

• Fee structure. The new policy will now require a $100,000 payment for each application. This represents more than a 2,000% increase from current filing costs. Companies may pay $300,000 upfront for a three-year visa or $100,000 annually.
• Wage requirements. The proclamation directs the U.S. Department of Labor to raise prevailing wage levels. This ensures H-1B workers aren't hired at below-market rates compared to U.S. workers.
• Timeline and implementation. The policy went into effect Sept. 21, 2025, with a one-year expiration date. It can be extended if the administration determines it serves U.S. interests. The policy applies only to new petitions for workers currently outside the United States. Current H-1B holders in the country remain unaffected.

How will the H-1B visa change affect businesses?

The $100,000 H-1B fee increase will impact businesses in a number of ways across multiple operations.

Cost and competitive impact

Hemant Mohapatra, partner and adviser at Lightspeed India, said the H-1B changes will create a clear divide across larger and smaller vendors.

"This $100,000 fee will advantage big tech companies that can afford it while shutting out smaller companies and startups, essentially concentrating talent and power among the tech giants," Mohapatra said. "Not only does this impact modern talent, but it will also affect the future talent pipeline with international students hesitant to come to the U.S.

The effect on innovation timelines will be severe in specialized fields. Mohapatra said companies should expect a major brain drain in the short term. Not just IT workers, but also highly skilled Ph.Ds – including health care workers -- and research leaders in semiconductors, biotech, space and robotics.

Geographic shifts

Organizations will also be affected in terms of where and how they do business.

"In addition to the cost considerations, this policy may push companies to reconsider how and in what locations they build their innovation capacity," said Shashi Bellamkonda, principal research director at Info-Tech Research Group. "We may see nearshoring and offshoring become more common as companies try to source talent from less-expensive markets."

Disproportionate effect on smaller organizations

It is also likely that the changes will have a disproportionate effect on smaller organizations.

"The impact will likely be felt most by small and mid-sized organizations -- since larger companies can more easily absorb the extra costs -- and the new process seems to favor higher-skilled, better-paid workers," Bellamkonda said.

Managed services risk

Alex Bakker, director of primary research at Information Services Group, highlights an often-overlooked concern with managed services risk.

"Does the organization have contracts with managed services providers that are built on the assumption of H-1B employees?" Bakker said. "Many IT departments rely on third-party providers whose cost structures may be fundamentally disrupted."

Academic and pipeline effects

There is also likely to be an impact on the academic landscape as well as the overall pipeline of skilled technical graduates.

"Only the most hopeful international students who think they have a real shot of landing a visa after school will risk coming to the U.S.," Mohapatra said. "Top talent will head to other countries such as the UK and Australia."

Bellamkonda echoes that concern, saying the uncertainty may cause some talent to leave the U.S. and explore opportunities around the globe. Only the most sought-after talent may continue the H-1B route.

How should business leaders address the change?

While the immediate operational impact may seem urgent, Bakker provides an important perspective.

"In the short term, the situation does not change, because the H-1B changes apply to the application and lottery award process for next year," he said. "So, the impacts are primarily around the future -- but there is work that can begin now."

Legal and compliance planning

The new policy creates immediate compliance risks due to unclear implementation details and undefined terms. Immigration attorney Tahmina Watson said organizations must act quickly to assess their exposure while key regulatory questions remain unanswered.

Businesses should consider taking the following steps to determine exposure and reduce risk:

• Conduct a workforce audit. Businesses should identify which employees are currently on H-1B visas, which cases may require amendments or extensions in the next 12 months, and which prospective hires will need sponsorship.
• Budget planning. If the $100,000 fee is imposed at the registration stage, it would dramatically alter participation in the lottery, Watson said. However, if it is due only after selection, the risk profile is different. For most small businesses and startups, the fee will likely be financially prohibitive, so early modeling is critical.
• Explore complementary visa categories. For key roles, Watson advises organizations to consider visa options such as O-1 (extraordinary ability), TN (for Canadian and Mexican professionals), E-2 (for investors from treaty countries) or even the International Entrepreneur Rule as interim solutions.

Immediate operational steps

While there are some longer-term considerations, there are also immediate concerns. Watson's recommendations for the transition period include the following:

• Minimize travel. Until there is clarity on implementation and compliance, Watson said they are advising clients to avoid unnecessary international travel to prevent unexpected disruptions to re-entry.
• Prepare for disruptions. HR and legal teams should be ready for rejected or delayed filings and build contingency plans for business-critical roles.
• Educate stakeholders. Leadership and hiring managers should be briefed on how these changes could affect timelines, budgets and head count planning.

Strategic recommendations

The $100,000 H-1B fee represents more than a cost increase. Rather than tactical adjustments, organizations need strategic transformations that address the new economic realities.

Several critical areas where organizations must rethink their approach to remain competitive include the following:

Recalibrate capital allocation models

Bakker notes that the economics of certain roles might change under the new system. With H-1B investments potentially reaching $300,000 per worker over three years, companies must treat international talent as capital expenditures requiring different ROI calculations and approval processes.

This shift demands new financial frameworks for evaluating talent investments against alternative uses of capital -- including automation, outsourcing or domestic capability building.

Rethink mergers and acquisitions strategies

Mohapatra said the policy will advantage big tech companies that can afford it while shutting out smaller companies and startups -- essentially concentrating talent and power among the tech giants.

This concentration effect creates new M&A opportunities as smaller firms struggle with talent access. Companies should evaluate acquisition strategies focused on talent-rich targets rather than traditional technology or market-based criteria.

Transform innovation development cycles

The impact of the visa changes will present challenges in the short term -- especially surrounding the availability of skilled professionals, Mohapatra said.

Organizations must redesign innovation processes to account for constrained access to specialized expertise. This may require longer development cycles, greater investment in foundational research capabilities or strategic partnerships that share scarce talent resources.

Establish executive-level immigration risk management

Watson said litigation could delay, modify or even strike down the $100,000 fee, while policy uncertainty continues. This level of regulatory volatility requires board-level oversight and strategic risk management.

Companies should establish immigration policy as a formal enterprise risk category with dedicated executive oversight, similar to cybersecurity or regulatory compliance programs.

Develop talent-centric business continuity planning

Bakker said the market will settle back to a new normal, though businesses may not be able to evaluate the impact until after the next lottery process.

This extended uncertainty period requires that business continuity plans specifically focus on talent disruption, including scenario planning for various levels of international talent access and corresponding operational adjustments.

The $100,000 H-1B visa fee represents a fundamental shift requiring reimagined enterprise IT hiring strategies. Organizations that proactively adapt their visa compliance for business processes, workforce planning and global operations will maintain competitive advantages. Those treating this as a temporary disruption may find themselves permanently disadvantaged in the global competition for technology talent.

Sean Michael Kerner is an IT consultant, technology enthusiast and tinkerer. He has pulled Token Ring, configured NetWare and been known to compile his own Linux kernel. He consults with industry and media organizations on technology issues.