The United States is considering a major immigration policy change that could significantly impact foreign workers. A proposal to remove the existing 60-day grace period for H-1B and other employment-based visa holders is currently under review by the White House Office of Management and Budget (OMB). Under the existing framework, certain foreign workers can remain in the US for up to 60 consecutive days after their employment is terminated, providing flexibility when they unexpectedly lose employment. However, if the proposed regulation is approved, workers whose immigration status is tied to their employment could face pressure to leave the US soon after their jobs end, unless they qualify for another immigration option or receive relief through US Citizenship and Immigration Services.
The number of properly submitted H-1B visa registrations has experienced a dramatic decline, with eligible registrations dropping 38.5% to 211,600 for FY27 from 343,981 in the previous year, according to the United States Citizenship and Immigration Services (USCIS). The FY27 figure represents at least a seven-year low, with the peak occurring in 2024 when there were 758,994 registrations. As reported by Business Standard, it remains unclear whether the 211,600 applications were for new filings, extensions, or change-of-status requests. Poorvi Chothani, founder and managing partner at immigration law firm LawQuest, attributed the steep drop to a 60-70% reduction in volume for FY27 cap cases compared to US FY26, citing factors including surge in artificial intelligence solutions and changes to the lottery system that favor higher-salary workers.
The US Department of Homeland Security (DHS) has published new rules that will require large employers to pay $4,000 for H-1B and $4,500 for L-1 applications for extension of visas of their employees. According to reports from Business Standard, the 9-11 Response and Biometric Entry-Exit fee will come into effect from September 9, 2026, expanding beyond the current scope which only applied to specific initial and change-of-employer cases. The new rule will be published in the Federal Register on August 10 and takes effect 30 days after publication. The rule is likely to increase immigration sponsorship costs for technology companies, global consulting firms, IT services providers, multinational employers and other organisations with a large number of H-1B and L-1 employees. DHS estimates that closing this administrative gap and collecting $4,000 to $4,500 on every extension petition will generate approximately $157.3 million annually. These revenues are statutorily designated to fund the US Customs and Border Protection Air and Sea Biometric Entry-Exit System.
Major Indian IT companies are adapting their US hiring strategies in response to the increased costs and regulatory changes. As reported by Business Standard, IT companies such as Tata Consultancy Services, Infosys, and Cognizant have filed for extensions of H-1B visas for onsite employees while simultaneously increasing transfer petitions. Cyrus Mehta, founder and managing partner of immigration law firm Cyrus D Mehta & Partners, noted that companies have been filing mainly extension and change-of-status requests for H-1B visas to avoid the $100,000 fee. The USCIS is yet to come out with its final list of selected registrations, but when H-1B workers change employers, they do not need to go through the lottery again, with workers often beginning work for new employers as soon as change-of-employer petitions are filed. Sukanya Raman, a US visa and immigration advisor with Davies & Associates, emphasized that the economics now favor retaining and redeploying existing H-1B talent through extending visas, reassigning workers across projects, hiring locally where possible, and pushing more work offshore.
The financial burden falls directly on employers rather than workers, though the impact varies significantly by company size. For a company with 100 H-1B employees whose visas need to be extended, the new fee alone would amount to $400,000 or approximately ₹3.3 crore at current exchange rates. For 100 L-1 extensions, the additional cost would be $450,000 or roughly ₹3.7 crore. The expanded scope significantly increases the financial impact, as reported by The Times of India, between fiscal 2018 and 2025, approximately 27% of H-1B petitions submitted by covered employers attracted the biometric fee. Had the new interpretation been in effect during this period, approximately 75% of their H-1B petitions would have been subject to the fee. DHS estimates that the additional payments to the US government will total $37.9 million in fiscal 2026 and $40 million in fiscal 2027.
Indian IT firms are actively reducing their dependence on H-1B visas, with data from specialist staffing firm Xpheno showing a steep drop in total applications by 18 Indian-listed IT services firms and Cognizant between 2025 and 2024, falling to 8,160 from 36,453. As reported by Business Standard, Indian firms have been trying to reduce their dependence on this visa for the last decade, ever since the first Trump administration, and are looking to hire more science, technology, engineering, and mathematics graduates from local college campuses. The US government has been adopting several measures to stem the influx of skilled immigrants through the visa process, alleging that they take away jobs from locals even as those immigrants are paid far less than prevailing US wages. This has prompted the government to introduce a weighted selection process that would favor higher-skilled workers over the decades-old lottery system when demand exceeds supply, creating wage tiers with higher-paying jobs having a better chance of selection.
