US Proposes Tax on Outsourcing: Potential Double Blow for Indian IT Industry

Report by: Syed Taskin Ahmed

The Indian IT sector, already reeling from the recent $100,000 H-1B visa petition fee, may face another setback as the United States considers imposing a new tax on outsourcing.

Under the proposed “HIRE Act”, American companies that outsource jobs to countries like India could be subjected to additional taxation. The legislation aims to discourage U.S. firms from moving employment opportunities overseas, encouraging more onshore hiring.

If implemented, the move is expected to have a significant impact on Indian IT giants such as Infosys, TCS, Wipro, and HCL, which derive a large share of their revenue from U.S. contracts. Analysts warn that this could lead to increased costs for U.S. tech companies and reduced competitiveness for Indian service providers.

Industry body NASSCOM has expressed concern, calling the combined effect of the H-1B visa fee hike and the outsourcing tax proposal a “double blow” for the $250 billion Indian IT industry.

The timing of these policy shifts has raised uncertainty across the sector, with experts noting that both measures—if enforced—could accelerate the trend of U.S. companies setting up offshore development centers outside India or automating more processes to cut costs.