Migration and the Economy
The H-1B Visa and Its Economics
How the U.S. H-1B visa brings skilled workers, especially from India, why it is controversial, and what the 2025 fee on new petitions changed.
The H-1B visa allows U.S. employers to hire foreign workers in specialty occupations, usually requiring at least a bachelor’s degree. It has shaped the careers of hundreds of thousands of Indians and the business models of IT companies.
How it works
- The annual cap is 65,000 new visas, plus 20,000 for people with U.S. master’s degrees or higher. Universities and some research organisations are exempt from the cap.
- Demand far exceeds supply, so visas are allocated by lottery.
- Visas last up to three years, renewable once, and holders can apply for permanent residence.
India’s share
Indians have received the large majority of H-1B approvals in recent years, often more than 70 percent. Many work in technology, both for Indian IT services firms and U.S. tech companies.
The debate
Supporters argue:
- H-1B workers fill skill shortages, especially in technology.
- They contribute to innovation; studies link skilled immigrants to more patents and start-ups.
- Restrictions push work offshore.
Critics argue:
- Some employers use H-1B workers to replace U.S. workers at lower cost.
- Workers are tied to employers, limiting their bargaining power.
- The lottery favours firms that submit many applications.
The 2025 fee
In September 2025, the U.S. government announced a 100,000 dollar fee on new H-1B petitions, following earlier changes to prioritise higher-paid applicants. Officials clarified that it did not apply to existing visa holders’ renewals. The fee greatly raised the cost of hiring new foreign workers, and companies responded by shifting more work to offices in India and elsewhere.
Effects on India
- Remittances and career paths for Indian professionals are affected.
- Global capability centres in India may gain as companies move work offshore.
- Students may look to other destinations, such as Canada, the UK, Germany or Australia, though these countries have also tightened rules.
An Indian software engineer working in the U.S. on a student work permit enters the H-1B lottery three times before being selected. Meanwhile, her employer considers moving her role to its Bengaluru office if she isn't selected.
Pay varies widely. Many H-1B workers earn high salaries, and rules increasingly favour higher-paid applicants.
- The H-1B visa lets U.S. employers hire skilled foreign workers, allocated by lottery.
- Indians receive the large majority of approvals.
- Supporters cite skills and innovation; critics cite displacement and worker dependence.
- A 100,000 dollar fee on new petitions from 2025 pushed some work offshore.
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