Trump's $100,000 H-1B Fee Reshapes Global AI Talent Landscape

Trump's $100,000 H-1B fee rattles Silicon Valley and threatens AI startups | Fortune

As the global AI arms race heats up, the Trump administration has introduced a new obstacle for U.S. startups: a $100,000 H-1B visa fee. The move, which is part of a wider immigration crackdown from the Trump administration, could be a blow to the U.S. tech sector, which relies heavily on skilled workers from India and China, and could put pressure on the already-strained AI talent pool. The new fee could make it especially hard for startups to hire elite engineers, which could slow wider innovation and experimentation. It also risks inadvertently concentrating top talent within Big Tech firms, which can afford to pay the new fees, and pushing skilled workers overseas, weakening the U.S. AI ecosystem and reducing diversity in research and development. Tech companies, including leading AI firms like Microsoft, Google, and Meta, make up nine out of the top ten companies that most frequently use the visa. Just under half of all H-1B visas in 2025 were designated for the professional, scientific, and technical services industry, according to data from the U.S. Department of Labor. "I don't see how these changes will help American workers, and it will for sure hurt the American tech ecosystem, which is powering our economy," Greg Morrisett, the Dean and Vice Provost of Cornell Tech, said. "The U.S. leads in tech innovation because it has attracted the very best talent from around the world." The global war for tech talent, especially AI talent, is already fierce, with some of the biggest companies offering all-star athlete-level salaries for the most desirable candidates, leaving startups struggling to recruit and hold onto talented staff. Gary Tan, the CEO of Y Combinator, said the new fee "won't bother big tech," but it would "kneecap startups and bodyshops the same." Companies like Meta, which are already reportedly paying some of their top AI talent compensation packages that exceed $100 million, will likely shrug off the new fees, but more cash-strapped startups will struggle to foot the extra cost. Catherine Betancourt, a partner at a US visa law firm in London, told Fortune that while large tech firms could be very affected if they rely heavily on H-1B workers, "smaller employers are likely to be more severely affected than large tech firms as the fee for even one H-1B employee could be impossible to pay." Managing to secure a few H-1B visas can have a serious impact on a startup's overall success. An NBER paper from 2020 found that startups with higher rates of H-1B visas are more likely to secure top VC funding, generate more patents, and achieve an IPO or acquisition. Gaining just one extra high-skilled worker raises the probability of an IPO within five years by 23%, according to the research. "Early teams can't swallow that tax," Tan wrote in a post on LinkedIn. "Bodyshops who abuse H1B should be stopped. There are ways to do that without entrenching big tech and throttling startups." There's also concern that U.S. companies could start offshoring talent in response to the new fees. A 2023 research paper from Britta Glennon, an assistant professor of Management at the Wharton School, found that restrictions on skilled immigration (like H-1B visa limits) can push U.S. multinationals to shift jobs abroad, especially to China, India, and Canada. Indian workers received the bulk of H-1B visas in 2024, accounting for 71% of the total approved H-1B beneficiaries in 2024 (just over 280,000 visas). Chinese workers were the next largest group, with 12%. On average, Glennon found that each visa rejection leads to 0.4 new foreign hires, rising to 0.9 for the most globalized firms. This means that overseas AI hubs, such as neighboring Canada, could also see benefit from a hiring boom if talent starts to flow elsewhere. Tan called the new fee a "massive gift to every overseas tech hub," adding that tech hubs like Vancouver or Toronto will thrive instead of American cities. "In the middle of an AI arms race, we're telling builders to build elsewhere. We need American Little Tech to win -- not $100K toll booths," he said. European countries could also benefit, especially the UK, where tech giants such as Microsoft and Google DeepMind already have large AI hubs. "With many global tech firms already established in Britain, and advantages like the English language and proximity to Europe, the UK is well-placed to attract a surge in high-skilled visa applications," Chetal Patel, head of immigration at Bates Wells, told Fortune. "The UK, despite its own immigration cost, suddenly looks like a better deal." "While the UK's Immigration Skills Charge already places a financial burden on employers, it pales in comparison to the punitive US fee hikes announced under the H-1B visa," she added.

Tech talent 'wapsi' may boost India's AI, SaaS, deep-tech - The Economic Times

The US $100,000 H-1B visa fee could encourage Indian talent to return home, boosting India's startup scene, especially in AI and deeptech. Founders expect many US-based graduates and professionals to build careers in India, seeing this as a key chance for the local tech ecosystem to grow rapidly.The US government's move to impose a $100,000 fee on H-1B visas could accelerate a reverse brain drain into India, potentially increasing the availability of skilled talent locally, particularly in the software-as-a-service, deeptech and artificial intelligence fields, startup founders and investors said. They expect a sharp rise in Indian talent, both fresh graduates and working professionals from the US, opting to build careers at home rather than seeking opportunities abroad. Manav Garg, founding partner at Together Fund, said this could be a key opportunity for India's startup ecosystem to attract talent. While the fee hike will not impact existing H-1B holders or renewals, he pointed out that a large pipeline of students and early-career professionals in the US will start moving back to India in the medium term, as companies may be reluctant to sponsor fresh H-1B petitions at such high costs. "Right now, AI is the gold rush. Many of them may launch startups or join as early employees. That is a massive talent shift," he said. India could replicate the US model of combining talent density with capital to build globally competitive companies, Garg said. "The US model has been to get the best talent and therefore they give a lot of capital, and the best companies come out of that. I think in the medium term, India can really turn the tide if we are able to attract the talent, provide capital to them and therefore create more companies which can be globally more competitive," he said. Indian deeptech founders say early signs of this trend are already visible. Bhaktha Keshavachar, cofounder of Bengaluru-based Chara Technologies that builds motors without rare-earth metals, said the number of Indian engineers with American degrees applying for roles in India has risen steadily in the past two to three years. "The unintended side effects of all these actions (assuming they will be implemented fully) will be far-reaching for the ecosystem in India in my opinion. Especially in core engineering and deep tech areas," Keshavachar said. The H-1B visa is a non-immigrant visa that allows US companies to hire foreign professionals in specialised fields such as technology and engineering. Indian IT professionals account for the majority of H-1B visa holders in the US. With the proposed fee making sponsorship costly, the demand in the US is likely to be limited to high-value, highly skilled talent. The shift in preferences is also evident among researchers. Laina Emmanuel, cofounder of neuroscience startup BrainSight AI, said her company has seen a steady increase in applications from post-doctoral researchers and PhD graduates in the US looking to work in India. "Now with this H-1B visa order, though this is still very early, I am hopeful that we will get more such applications from Indians looking to return. In the long term, this will be good for Indian AI and deeptech," she said. Innovation shift Industry executives said the policy change could accelerate India's shift from being an outsourcing hub that supplies talent for innovation in Silicon Valley to building more original products at home. They added that India will need to invest heavily in AI models to move beyond its services-led base, where most firms currently operate in the application layer of automation. "As a country, we need to start looking at going away from services to innovation. If not, we will be irrelevant. We need to invest in products. We are all playing in the application layers, and need to get into the deep tech, building AI models," said Arvind Parthiban, cofounder and CEO of SuperOps.ai, a software provider for IT management services. "It is a wakeup call for us where we need to come and invest in deep tech, which can make a difference in a decade or two." The US has clarified that the executive order signed by President Donald Trump on September 19 will be levied for new petitions and will not apply to current visa holders.