A proposed new US law presents a fresh challenge for skilled Indian professionals. The Halting International Relocation of Employment (HIRE) Act 2025 could impose a heavy tax on American companies that outsource work. This comes as Indian workers already face a recently levied $100,000 fee for certain H-1B visa applications.

Former RBI Governor Raghuram Rajan has voiced serious concerns about the measure. He warned it represents a dangerous expansion of US protectionist policies from goods to the vital services sector.

Understanding the Proposed HIRE Act Legislation

Senator Bernie Moreno introduced the HIRE Act. Its goal is to discourage US firms from sending jobs overseas to find cheaper labor.

The bill’s core mechanism is a significant financial penalty. It proposes a 25% tax on payments made by US companies to foreign individuals or firms for services that ultimately benefit American consumers.

These “outsourcing payments” cover a wide range. They include fees, royalties, and charges for labor or services. Crucially, US businesses would also be barred from claiming tax deductions on these outsourced expenses.

Potential Impact on Indian Professionals and Exports

The immediate effect could be a sharp fall in demand for outsourced jobs. A 25% tax makes offshoring work to India far less attractive for US clients. This would likely lead to fewer contracts and reduced opportunities for Indian remote experts and firms.

Visa sponsorship prospects could also dim. While the act doesn’t directly change visa rules, it reinforces a “America First” hiring sentiment. US companies may become much more reluctant to sponsor H-1B or L-1 visas for foreign talent.

India’s IT services sector faces a direct hit. The United States is its largest market. A new tax erodes the competitive pricing advantage that drives much of this export revenue. It could stifle growth and investment in one of India’s key economic engines.

The combined pressure of the H-1B fee hike and the potential HIRE Act creates a perfect storm for India’s tech workforce. Its long-standing role in the global services supply chain is under unprecedented threat.

A quick knowledge drop for you

What exactly is the HIRE Act 2025?

The HIRE Act is a proposed US law. It aims to tax American companies that outsource work, applying a 25% levy on payments for services that benefit US customers.

How is the HIRE Act different from the H-1B fee increase?

The H-1B fee targets individual visa applicants. The HIRE Act targets the business model of outsourcing itself, taxing the companies that send work overseas rather than the workers coming to the US.

Which Indian industries would be most affected?

India’s IT services, business process outsourcing (BPO), and consulting sectors are most exposed. These industries rely heavily on contracts from US-based corporations and could see costs rise dramatically.

Could this affect Indian professionals working in the US?

Indirectly, yes. The protectionist sentiment behind the act may make US firms more hesitant to hire foreign talent on-site. It could lead to increased scrutiny for all work visa categories.

Has this legislation been passed yet?

No, the HIRE Act is currently only a proposed bill. It must go through the full US legislative process, including committee reviews and votes in both the House and Senate, before potentially becoming law.

What are the long-term implications for India?

Long-term, it could force a major strategic shift. India’s service export model may need to move towards higher-value innovation and domestic product development to reduce dependency on US outsourcing contracts.

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