Since the Trump administration instituted $100,000 fees for all new H1-B temporary work visa applications in the United States back in September, the high price tag is impacting the tech marketplace already.
Victor Janulaitis, the CEO of consulting firm Janco Associates, Inc., told ChannelE2E that the
Trump H1-B fee increase is causing havoc for companies of all sizes.
“The new fee structure will eliminate the ability of small- and medium-sized businesses (SMBs) to use the H-1B visa program,” said Janulaitis. “When you consider that over 50% of all IT jobs before COVID were in SMBs, that is a major downside of the fee approach. Second, with the ability to work remotely, SMBs may opt to hire staff who desire to work from Canada and Mexico.”
“Only larger entities – such as MSPs, MSSPs, consulting firms, and outsourcers – will be able to afford the fees,” he said. “The impact will be fewer foreign workers in the U.S. For example, Microsoft would hire these same foreign workers and domicile them in Canada, in the same time zone and an English-speaking country."
In addition, with limited data due to the government shutdown, Janulaitis said he is “seeing reluctance among enterprises of all sizes to start new IT initiatives or hire new staff. That will dampen demand for IT pros and H-1B visa workers. The shutdown is impacting the ROI of projects and activities that use H-1Bs.”
Why are H1-B Visas Important to Businesses?
H1-B visa applications are available to companies so they can
request government permission to bring in college-educated foreign professionals to temporarily work in specialty occupations, according to the American Immigration Council. The visa requirements mandate that candidates have at least a bachelor’s degree and can work in jobs such as civil engineers, software developers, and researchers. The visas are initially issued for three years but can be extended for up to six years.
In the past, H1-B visa petitions cost employers about $2,000 to $5,000 per application, which paid for paperwork and other related fees.
The H1-B visa program began in 1990 as a way for companies to bring in needed specialized workers only when an adequate number of skilled American workers could not be found within the U.S. workforce. The government caps the number of available H1-B visas at 65,000 each year, plus offers an additional 20,000 H1-B visas for foreign professionals who graduate from a U.S. college or university with a master’s degree or doctorate, according to the American Immigration Council.
Several analysts and employment experts who spoke with ChannelE2E said they see broad impacts and concerns about the administration’s changes to the H1-B visa program and its effects on businesses.
A ‘Dramatic Shift’ in Policy for MSPs and Other Channel Partners: Analyst
Shelly Kramer, the founder and principal analyst at Kramer&Co., said the new Trump fee “represents a dramatic shift in U.S. immigration and labor costs and policy for the technology sector.”
“While this fee is a one-time charge applicable only to new petitions after September 21, 2025, and does not affect existing visa holders or renewals, there is no doubt that the impact on the tech marketplace, especially MSPs and MSSPs, will be significant,” said Kramer. “While large IT consultancies and outsourcing firms are the primary users of this visa program, some smaller and mid-sized providers also rely on the H-1B visa program to fill highly skilled roles that might otherwise go unfilled. Obviously, for smaller MSPs and MSSPs, this exorbitant fee is likely insurmountable, especially given the reality of today’s widespread and challenging, uncertain economic times.”
But larger service providers, which might be better equipped to absorb these higher costs, will not escape their consequences, she added. Instead, Kramer said she expects many of those companies to reevaluate their staffing models in response.
“I expect that companies are already refining their workforce strategies with a view toward either offshoring or nearshoring their tech teams to regions like Latin America or Eastern Europe rather than figuring out how to pay these fees,” she said. “Overall, this is not good for the competitiveness of the U.S. tech sector. It shrinks the pool of available talent and limits service providers’ ability to deliver for their clients."
The effects for MSPs and MSSPs are even greater because they typically do not have the size and scope of bigger channel partners and service providers, she said. “MSPs and MSSPs are particularly vulnerable given their critical role in enterprise operations and cybersecurity, and this change, along with rising costs, regulatory complexity, and a tightening domestic labor market, are all challenges that will no doubt reshape the industry as a whole for some time to come.”
Another analyst,
Jack E. Gold, president and principal analyst with J.Gold Associates, LLC, said he agrees that the higher new fees “will hurt all but the biggest organizations that can afford them.”
While smaller MSPs probably do not use H1-B applications, some larger MSPs do apply for them, he said. Now, some of them may forgo the applications and just make do with the staff they have, said Gold.
Meanwhile, the H1-B Visa Fee Increase is Based on a ‘False Premise ’: Analyst
Behind the visa permit increase, though, is a government argument that is not based in fact, said Gold.
“The notion behind these fees, that foreigners are taking U.S. jobs, is a false premise for the most part,” said Gold. “There simply are not enough qualified U.S. candidates, and we are suppressing employment and the ability of companies to grow with these fees. It is a bad idea in my opinion. So, if these fees result in more work going to firms in India as a result, how are we helping expand employment opportunities for U.S. companies and workers?”
H1-B Visa Policies are ‘Still Fluid,’ Analyst Says
Paul Nashawaty, principal analyst for AppDev and modernization at theCUBE Research, told ChannelE2E that while the $100,000 new fee is reportedly a one-time charge and only applies to new visa applications and not renewals, he wants to wait and see how things shake out.
“The situation is still fluid, and details could shift as policies move through the rulemaking process or face legal challenges,” said Nashawaty. “In terms of impact, the most immediate effects would likely be felt by larger IT services firms that rely heavily on H-1B workers, companies like Infosys, TCS, Cognizant, and IBM. These organizations sponsor thousands of new visas annually, so a fee of that size could quickly add up and affect cost structures or hiring strategies.”
Nashawaty agreed that for smaller MSPs and MSSPs, the situations can be more nuanced because, in comparison, they do not typically sponsor large numbers of H-1B workers, so the direct financial impacts might be limited. “However, they could still feel secondary effects if talent becomes scarcer or more expensive across the broader tech labor market, particularly in cybersecurity, cloud management, and infrastructure services where skilled workers are already in short supply,” he added.
One thing Nashawaty said he expects to see if the higher fee continues is an increased emphasis on upskilling U.S.-based talent.
“Companies may invest more in training and development programs to fill critical roles that would have previously relied on H-1B hires,” he said. “This could accelerate the growth of in-house learning initiatives, certifications, and bootcamps aimed at equipping domestic professionals with advanced cloud, cybersecurity, and infrastructure skills. Over time, this might help close the skills gap, though it will not happen overnight.”
Another area to watch is how global delivery models adjust to the situation, said Nashawaty. “Some companies might shift more work offshore or rely on remote global talent to offset the higher U.S. entry costs. Overall, this proposal highlights how immigration policy directly intersects with technology competitiveness. The outcome could influence not only workforce costs but also innovation capacity and project delivery timelines in a market already balancing talent shortages and accelerating demand for digital transformation.”
Changes in H1-B Visa Applicants Already Being Seen: Analyst
Peter Bryant, a practice lead at research firm Omdia, said his company is already seeing H1-B applications shift from larger Global System Integrators (GSIs) over to tech firms, based on fresh data from the U.S. Citizenship and Immigration Services website.
“For GSIs, there is a bit of a shift in how they have traditionally hired, but frankly, they have larger headcounts than they can effectively manage as it stands,” said Bryant. “Their operating models are shifting towards platform providers rather than large-scale lifts and shifts. The traditional large-scale digital transformation is changing.”
The expensive new H1-B visa fee will force even broader analyses of each situation for service providers, he said. And in each case, the visa applicants will have to decide if spending that much money is a wise investment at this point. For some applicants, it may no longer be worth it, he added.
For GSIs, the expanding use of AI agents “will cover some of the skills gaps that traditionally were filled by the H1-B hiring approach,” said Bryant. “If you need to spend $100,000 on top of the individual's salary, there is a lot of money there to spend on development.”
