India GCCs to gain as US plans sharp H-1B wage hikes

Amid a significant proposed increase in US H-1B wage levels, India’s global capability centres (GCCs) could emerge as major beneficiaries as MNCs rethink global workforce strategies.

GCCs are evolving on a new talent scorecard, with a sharper focus on smaller teams delivering outcomes and creating new benchmarks for productivity in a visa-agnostic environment. India now has 2,117 GCCs that employ more than 2.3 million professionals and generate revenues nearing $100 billion.

The higher H-1B wage costs are expected to push MNCs to accelerate offshore and nearshore expansion strategies across regions such as India, Eastern Europe and Latin America, prompting US firms to rebalance workforce deployment models globally. For many global firms, expanding distributed delivery centres outside the US may become a more cost-efficient and scalable alternative as onsite hiring expenses rise under the proposed framework.

According to immigration services firm Boundless, the US Department of Labor’s regulatory analysis projects substantial economic implications from the proposed wage rules. On a per-worker basis, the proposal could increase compensation costs by an estimated average of $14,000 annually for each affected H-1B position.

David J. Bier, director of immigration studies at Cato Institute, said, “My analysis is that the rule will bar about 80% of H-1B wage offers, including many of the highest skilled H-1B workers. I agree that this will increase offshoring and decrease US tech employment overall compared with if it did not adopt the rule.”

The proposed H-1B wage revisions would sharply increase prevailing wage levels across all categories. Entry-level wages (Level I) would rise from $73,279 to $97,746, marking a 33.4% increase. Level II wages would increase from $98,987 to $123,212, while Level III wages would rise from $121,979 to $147,333. For fully competent workers under Level IV, wages would increase from $144,202 to $175,464, representing a 21.7% jump.

Stephen Yale-Loehr, retired immigration law professor at Cornell Law School, said the labor department’s proposed rule is aimed at increasing wages for foreign-born workers. “However, it will also put wage pressure on US employers. US companies will either hire fewer US workers or offshore more of their work to India and other foreign countries. Ultimately this rule will hurt, not help, US workers.”

Back home, many in the IT sector believe the long-standing talent pyramid structure has begun to fade. Ramkumar Ramamoorthy, partner at tech growth advisory firm Catalincs, said that in the new era of intelligence and imagination, traditional talent models are giving way to a combination of humans and agents augmented by AI tools. “In this context, it is unwise to look at incremental compensation cost as traditional models were built on input cost while the new models are based on business output and outcome. We are beginning to see newer compensation benchmarks being defined for these newer competencies and roles, and only over time will we be able to make meaningful comparisons.”

Vikram Shroff, partner, employment, labour and benefits at AZB & Partners, said AI is creating new business models and countries like India, with a strong talent base, are likely to benefit as MNCs look to scale while maintaining cost arbitrage. “The rising USD-INR rate helps manage the overall cost of services from India,” he said.