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A recent report by Emkay Global suggests that the growth of India’s IT-services exports could slow down to below 4% due to the sharp hike in H-1B visa fees. This projection is a significant revision from the earlier estimate of 5% growth in FY26 and a 7% compound annual growth rate (CAGR) over the next five years.

The report noted that GCC evolution and adoption of new growth models by IT firms will be key in shaping the sector’s outlook.

“Indian IT/software gross/net exports stood at US$181 billion/160 billion in FY25 and we had assumed 5% growth in net IT services exports for FY26E, with a 7% CAGR growth for next 5 yrs. This could reduce to sub-4 per cent depending on sustained H1B visa-led risks and GCC evolution”, the report noted.

India’s IT and software exports stood at US$181 billion gross and US$160 billion net in FY25. Global capability centres (GCCs) already contribute more than US$65 billion in gross exports.

The U.S. recently raised H-1B visa fees to US$100,000 for new visas, from the earlier US$1,500-4,000 range. The change does not affect existing visa holders or renewals, but could weigh heavily on Indian IT companies’ dependence on new on-site visas.

According to Madhavi Arora, Chief Economist at Emkay Global, “Near-term impact may be limited on IT revenue/margins. However, if sustained, it could disturb Indian IT exports, companies’ traditional models, pressurize project margins, disrupt Indian IT supply chains and on-site projects.”

GCCs, which already contribute over US$65 billion in gross exports, will play a crucial role in shaping the sector’s outlook. The evolution of GCCs and adoption of new growth models by IT firms will be key in determining the impact of the visa fee hike. As the sector navigates this challenge, companies may try to offset the pressure by shifting more delivery offshore.

Key Statistics:

• Indian IT Exports: US$181 billion (gross) and US$160 billion (net) in FY25
• GCC Contribution: Over US$65 billion in gross exports
• Projected Growth: Below 4% (revised from 5% in FY26)
• H-1B Visa Fee Hike: Raised to US$100,000 for new visas, from the earlier US$1,500-4,000 range

While the near-term impact may be limited, sustained higher fees could disrupt traditional export models and pressurise project margins. The shift in delivery and export models towards offshoring could provide IT export offsets. However, risks could rise further if the proposed HIRE Act is passed.