Indian IT companies are sharply reducing fresh H-1B visa applications for the United States as higher immigration costs, changes to the lottery system and the growing use of artificial intelligence reshape workforce planning.
According to data from the U.S. Citizenship and Immigration Services (USCIS), the number of eligible H-1B registrations fell 38.5% to 211,600 for fiscal year 2027, which runs from October 1, 2026, to September 30, 2027. This is down from 343,981 registrations a year earlier.
The FY27 figure is the lowest in at least seven years. H-1B registrations had peaked at 758,994 in 2024, showing how sharply demand for the temporary work visa has changed in just a few years.
The decline comes as Indian technology companies rethink a hiring model that has traditionally relied heavily on moving skilled employees to the US through H-1B visas.
Higher visa-related costs, along with changes to the selection system that give greater preference to higher-paid positions, have made the process more expensive and less predictable for employers.
Immigration experts say companies are now carefully examining whether they really need to sponsor foreign workers for US positions or can instead depend on local hiring, offshore teams and technology.
Poorvi Chothani, Managing Partner at LawQuest, said the fall in applications was partly due to the increasing use of AI and changes to the H-1B lottery system.
AI is becoming another important factor in reducing demand for some H-1B roles. Companies are increasingly using AI tools to automate routine work and improve productivity, which could reduce the need for certain jobs that were previously filled through overseas hiring.
At the same time, employers may face additional costs when foreign workers apply for visa extensions.
Chothani recently pointed to a proposed Department of Homeland Security rule that could expand the 9-11 Response & Biometric Entry-Exit Fee to certain H-1B and L-1 extension petitions.
If finalised, covered employers could be required to pay an additional $4,000 for qualifying H-1B extension petitions and $4,500 for qualifying L-1 extension petitions.
The proposed fees would apply to certain employers with at least 50 workers, where at least half of the workforce holds H-1B or L-1 status.
Importantly, the proposed charges may not be limited to new petitions or change-of-employer filings. They could also apply to routine visa extensions.
Although employers, rather than workers, would have to pay these fees, the higher costs could still influence decisions on hiring, visa renewals and long-term sponsorship.
The issue is particularly important for Indian professionals. According to Chothani, Indian nationals account for 77.6% of H-1B renewals, making them the group most exposed to any increase in employer sponsorship costs.
However, the proposed DHS rule has not yet been finalised. Existing H-1B and L-1 approvals remain valid, and current filing requirements continue unless a final rule is issued.
For Indian IT companies, the sharp fall in new H-1B registrations points to a broader shift.
Rising immigration costs, salary requirements, changes to the lottery system and rapid AI adoption are all forcing companies to rethink how much of their US workforce really needs to be brought in from abroad.
The FY27 numbers suggest that the H-1B visa remains important to the US technology industry, but Indian IT firms are becoming far more selective about when and where they use it.
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