The US administration’s policies on H-1B visas continue to cause political waves. Last week, President Donald Trump angered some of his own supporters by defending the use of such visas, saying that the programme helps US companies bring in workers for high-skilled, specialist roles that would otherwise be hard to fill. The Trump administration has also proposed a one-time fee on new H-1B applications. Opponents of such visas claim they undercut domestic workers and deter US citizens from entering such fields in the first place. On the other side, it is argued by the likes of tech tycoon Elon Musk, and others, that attracting skilled immigrants boosts the economy overall, increasing the demand for skilled jobs.
Inevitably, such topics are fraught with political and cultural debates that go beyond economics. And the debate also highlights how what is known as the “re-shoring” of economic activity plays out. What does this shift mean for a country such as India and its large number of tech-savvy adults who have traditionally been among the most enthusiastic applicants for these visas? What are the investment implications?
The author of the article is Andy Draycott (pictured below), a partner at , who manages the Chikara Indian Subcontinent Fund. The editors of this news service are pleased to share these insights; the usual editorial disclaimers apply. To comment, email tom.burroughes@wealthbriefing.com and amanda.cheesley@clearviewpublishing.com
Andy Draycott
At first glance, President Trump’s decision to impose a one-off, $100,000 fee on new H-1B visa applications may look like a blow to India. The nation’s citizens account for more than 70 per cent of these skilled worker visas, and they have long been central to its massive outsourcing sector (1).
In practice, however, we expect the change to be far more of a domestic growth catalyst than a constraint, with many Indians likely to take on the same roles they would have in America, on home soil.
The result? There is likely to be a vast increase in both domestic spending power and direct foreign investment. And we expect this to not only have a positive impact on the wider Indian economy, but to also create a wave of new opportunities for investors.
Relocating the work, not the worker
There’s no denying that Trump’s move puts pressure on traditional Indian outsourcers.
These companies have relied on H-1B visas to place skilled staff directly on client sites in the US for decades (2). With application costs suddenly surging, this approach is becoming far less viable. And unsurprisingly, the market has recognised this, with valuations of many outsourcing firms sliding in the weeks since Trump’s announcement (3).
Still, what the punitive new fees do not alter is the underlying demand for Indian talent.
From Silicon Valley giants like Amazon, Microsoft, and Google to Wall Street banks such as Citigroup, JP Morgan, and Goldman Sachs, Indian expertise is deeply embedded in the global economy.
If the H-1B channel becomes prohibitively expensive, these firms will not simply walk away. They are more likely to expand their presence within India itself, relocating the work rather than the worker.
This is a process already underway through the rapid growth of Global Capability Centres.
GCCs allow multinational firms to build offshore hubs in India that perform high-end technology and support functions. Once limited to low-cost back-office roles, these centres now handle sophisticated tasks in areas such as artificial intelligence, cloud computing, cybersecurity, and financial analysis.
They have already become critical to global corporate operations. According to EY, GCCs have expanded into a $64 billion industry, compounding at nearly 10 per cent annually between 2019 and 2024 (4).
If Trump’s new cost structure is enforced, then we expect them to grow even more rapidly over the coming years as US firms rush to scale up their Indian presence.
A stronger consumer
The potential acceleration in insourcing by US companies in response to Trump’s visa charge stands to be enormous.
It means that thousands of jobs once carried out in America could now be created in India. These are unlikely to be low-value roles, either. They will trend towards highly skilled positions requiring engineers, developers, analysts, and other professionals, adding a growing cohort of affluent workers to India’s economy with even greater spending power.
The effect could benefit many domestic sectors. Banks and insurers are likely to gain from rising demand for mortgages, loans, and protection products. Healthcare providers will see more families being able to afford private treatment. Consumer goods companies will enjoy stronger demand of both everyday staples and discretionary items. Real estate firms will profit from increased housing demand, while retailers and leisure businesses will capture spending on lifestyle upgrades.
For investors, this dynamic is critical.
As these domestically-focused companies generate higher revenues, profits, and growth, their market valuations stand to rise. The result is a powerful opportunity: insourcing not only strengthens the economy as a whole but also creates attractive prospects across India’s consumer-driven industries.
An opportunity, not a setback
Seen from this perspective, Trump’s H-1B fee is less a setback for the Indian economy and more a trigger for structural transformation. By making the traditional outsourcing model less attractive, US companies will be pushed to create more high-value jobs within India itself.
The benefits to India go well beyond employment.
More foreign direct investment, stronger consumer spending, and rising demand across sectors such as finance, healthcare, real estate, and consumer goods all reinforce India’s long-term trajectory.
For investors, this is the key point: while outsourcers may face headwinds, domestically-focused companies stand to enjoy stronger revenues, faster growth, and, ultimately, higher valuations.
Footnotes
1, Taken from Bloomberg article Andy sent over “Modi will pay a price fro H-1B visa curbs”
2, Taken from Bloomberg article Andy sent over “Modi will pay a price fro H-1B visa curbs”
3, https://www.barrons.com/articles/tech-stocks-fall-h1b-immigration-visa-41b580d3
4, Taken from Bloomberg article Andy sent over “US banks to lean on India hubs after Trump imposes visa fees”
About the author
Andy Draycott manages the Chikara Indian Subcontinent Fund which was launched in November 2018. He has been with Chikara Investments LLP (Chikara) since 2008, initially working on the CC Asia Alpha Fund and the Chikara Asian Evolution Fund from 2010. Prior to joining Chikara, Andy spent three years in Hong Kong with Macquarie Securities, and before that Merrill Lynch Asia, and TT Investment Management on the Asian desk in 2001.