What a $100K H-1B Visa Means for US Tech Companies and Their Talent Strategy

H-1B visa program changes, introduced by President Trump on September 19, 2025, impose a hefty fee of $100,000. A new policy proposes a lottery system based on wages, prioritizing higher-paid positions and enforcing stricter company audits. The news struck the US tech industry like a hurricane, leaving innovation executives with uncertainty, as experts warn of serious long-term consequences for the US’s competitiveness.

I’m Dmytro Ovcharenko, founder and CEO at Alcor. For 7+ years, we’ve been helping US tech companies leverage nearshoring and offshoring locations by building fully operational software R&D centers of 10 to 100 engineers in a year, with zero buyouts.

Read this article to explore the nuances of the H-1B proclamation as well as possible risks and outcomes for your tech company. You’ll also discover actionable strategies to keep your business growth plans on track.

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Key Takeaways

1. Trump’s H-1B proclamation introduces a $100,000 fee for H-1B petitions, aiming to encourage domestic hiring but generating uncertainty in the tech industry, especially among startups and mid-sized tech firms.
2. The $100,000 H-1B fee applies to new petitions filed after September 21, 2025, without impacting renewals, existing visas, or travel for current visa holders. Yet, there is uncertainty for candidates switching visas, extending employment, or changing employers, as well as regarding the collection and verification of fees.
3. Historically, H-1B visas have been crucial for US, as they sustained the country’s global competitiveness. New changes that are referred to as homeland security measures may affect the US’s ability to attract highly skilled foreign talent, potentially resulting in an innovation slowdown.
4. Tech companies are forced to reevaluate their hiring strategies and refrain from possible hiring freezes due to the new H-1B visa fee. Some may consider alternative ways of accessing foreign tech talent by opting for offshoring or nearshoring markets.
5. Alcor enables smooth tech expansion into LATAM & Eastern Europe via a software R&D center solution. With tech recruitment, Employer of Record, and ops in one place, tech companies enter new markets with a 5-dev team in a month. They can further scale it to 100 in a year – with no markups or vendor lock-in.

Trump’s H-1B Proclamation Explained

The Trump administration enacted a rule mandating a $100,000 fee for all new H-1B visa petitions. This measure, presented as a way to protect American workers by minimizing foreign competition, may pose a threat to the US tech industry’s competitiveness.

On September 19, 2025, President Trump issued a presidential proclamation restricting the entry of H-1B nonimmigrant workers. The most consequential change is the introduction of a new $100,000 fee that employers must pay for every H-1B petition, with no exemption for startups or nonprofit research labs (as currently written).

The changes to the H-1B visa program align with Trump’s ongoing commitment to a protectionist labor strategy, echoing his 2016 rhetoric that foreign hiring in tech “undercuts American workers.” The proclamation argues that the H-1B visa program has been largely exploited by companies in tech-related occupations, particularly by IT outsourcing firms, to hold down wages.

The proclamation cites federal data showing the share of the H-1B workers increased from 32% in 2003 to over 65% in recent years, while overall STEM employment grew only 44,5% during the same time period.

In effect, new H-1B visa rules intend to push tech employers toward domestic hiring decisions, regardless of market constraints or cost realities. The question now is not whether innovative companies will react, but how drastically these changes will affect the US tech industry overall.

What Tech Companies Need to Know

Although renewals and pre-September 21 filings are exempt, USCIS has not clarified how the proposed $100K fee will affect transfers, amendments, or status changes, hindering employers’ hiring plans for 2026. This situation could significantly increase hiring costs for startups and mid-sized tech companies, potentially leading them to halt recruitment, choose more expensive visa categories, or relocate teams overseas.

1. Pending guidelines

The US Citizenship and Immigration Services (USCIS) hasn’t yet finalized how broadly the $100,000 fee applies. For now, the USCIS identifies that the fresh updates to H-1B visa rules:

• Don’t apply to any previously issued H-1B visas and applications that were filed before the effective date on September 21, 2025, 12:01 a.m. Eastern Daylight Time.
• Don’t presuppose any additional payment requirements for H-1B renewals. The one-time $100,000 payment is applicable for new cap-subject and certain cap-exempt petitions.
• Don’t restrict current H-1B holders from traveling in and out of the US.

Yet, it’s still unclear whether the $100,000 fee applies to candidates who are already in the US but need to switch visas, as well as to extension, amendment, or change-of-employer applications. There are questions about how employers should pay and verify the fee if no payment mechanism is in place.

It’s important to note that the new H-1B rules are still a proposal, open for public comment from September 24, 2025, for a 60-day period. Until the formal implementation guidelines are issued, tech companies will most likely have to pause their workforce planning for 2026.

2. Hiring budget impact

The H-1B program was a cost-effective solution, particularly for small and medium-sized tech companies, for filling talent gaps with specialized engineers from abroad. Following recent changes, in addition to legal, compliance, and relocation expenses, tech businesses should incur an extra $100,000 fee, which could increase the cost per hire by 2x or even 3x.

Now, there are three possible scenarios to consider:

1. You’ll seek other visa sponsorship options to still engage foreign tech specialists, which may trigger additional compliance and relocation issues, as well as a waste of resources.
2. You’ll rethink your hiring budget, which will have a direct impact on your product development and competitiveness.
3. You’ll explore lower-cost locations with rich tech talent pools to access top developers without spending a fortune. For instance, some tech companies choose to outsource to Ukraine or any other Eastern European country. But there is a safer option. Keep reading to find out!

What Foreign Tech Talent Should Be Aware Of

Tech professionals who filed visa applications before September 21 are currently safe. However, delays and suspensions are still possible as employers reevaluate budgets. This may lead to fewer job openings or even talent freezing. Alternatives such as F-1 OPT, J-1, and L-1 visas are available for foreign talent, but a more strategic approach to job searching is recommended.

1. Application risks

If your employer filed an H-1B visa application before the proclamation took effect on September 21, 2025, you’re safe and your employer won’t have to pay a $100,000 fee. However, if your petition is still in progress, you may be affected by the new changes.

2. Halted hiring

Considering the added financial strain on technology companies, executives, especially those of startups and mid-sized companies, may take a pause or even opt to cancel H-1B sponsorship programs. This means fewer vacancies even for in-demand roles like AI, DevOps, or Cybersecurity Engineer.

Still, you may consider other visa options. For entry-level and junior tech experts, there is an F-1 student visa, which allows you to work under the Optional Practical Training (OPT) program. Alternatively, a J-1 visa is available for individuals participating in exchange visitor programs, which are particularly relevant for training purposes. Another option is an L-1 visa for employee transfer by a tech company to their US parent or affiliate office.

3. Possible exemption

There is still a possible scenario where you could avoid the consequences of the H-1B program changes. The DHS Secretary has the power to grant exceptions in the “national interest” to companies and even entire industries. Therefore, I advise you to stay informed through official US sources, such as the Department of State (DOS) or USCIS.

The H-1B Visa and Its Role for the US Tech

Since 1990, the H-1B visa has been crucial for US innovation, as it has provided skilled engineering talent limited in the local market. For many years, the STEM sector accounted for the largest share of H-1B approved applications. This foreign tech workforce occupied essential roles in AI, cloud, and other in-demand skills, enabling US tech supremacy rather than merely offering cheap labor.

Enacted in 1990 under the Immigration Act, the H-1B visa has been essential for supplying highly skilled foreign engineering talent in the US in fields where domestic expertise was limited. They also filled crucial in-demand roles like AI engineering, reinforcing the program’s role in maintaining US technological leadership rather than merely providing cheap labor. With just 65,000 slots per fiscal year, plus 20,000 extras for foreign master’s and PhD graduates from US universities, demand for this visa has exceeded supply. And the H-1B process has evolved into a lottery system.

In the 2024 fiscal year alone, the professional, scientific, and technical services sector accounted for a significant 48% of all approved petitions – the highest percentage compared to other industries, as reported by USCIS. And this isn’t about low-cost labor but about the critical innovation capacity that highly-skilled foreign STEM experts offer.

Over the years, H-1B professionals have become vital contributors to the US technology innovation. According to the National Foundation for American Policy, 40% of Nobel Prizes in the science category awarded since 2000 have been to immigrants, while over 55% of the country’s $1 billion startups have had at least one immigrant founder. Studies also show that admitting more H-1B employees increases productivity and profits in R&D-related companies.

Big Tech knows this well and has been heavily relying on H-1B software engineers to maintain its competitive edge in innovation. Amazon alone secured about 15,000 approvals for H-1Bs in 2024, while Microsoft and Meta each received around 5,000 approvals, according to Reuters.

If this talent pipeline is removed, thousands of US tech companies may face a talent deficit they cannot fill domestically, resulting in far-reaching economic consequences for the US.

Risks & Possible Outcomes from H-1B Visa Changes for US Tech

In the short term, a $100K H-1B visa fee may pose operational uncertainty, hinder hiring, and affect the productivity of existing development teams. Long-term effects could include talent migration to other countries, a national slowdown in innovation, and a shift of R&D centers away from the US. Tech companies might avoid building teams in unstable environments, potentially speeding up offshore expansion as a precaution.

Short-term outcomes:

1. Hiring freezes

The $100,000 visa fee will likely force tech companies to delay or even cancel H-1B petitions because the expenses for hiring foreign talent are now dramatically disproportionate to expected returns. Businesses may completely halt their team scaling plans or start looking for developers elsewhere.

Consider offshore software outsourcing in Romania to keep your product development on track!

2. Operational uncertainty

Many H-1B program details regarding registration, payment mechanisms, exemptions, and enforcement remain unclear. Meanwhile, the first civil lawsuits that challenge the legitimacy of the new order were filed in the federal court of San Francisco. All these factors only add fuel to the fire, potentially leading to lost fillings, rejections, and compliance risks.

3. Workload strain

Companies that planned to scale their development teams with a foreign workforce will likely have to stretch existing staff beyond reasonable capacity to keep up with market competition. As 73% of US tech companies are already struggling to fill open positions, extended hiring time may potentially cause burnout or even employee retention issues, resulting in missed product deadlines and weakened investor confidence.

Long-term outcomes:

1. Foreign talent decline

Due to the high fee for the H-1B visa, tech companies will become more selective in approving candidates, which will lead to fewer foreign tech experts entering the United States. And this policy doesn’t just keep the foreign talent out. It pushes it into competitors’ hands.

India, the largest source of H-1B applicants, which has accounted for 70% of recipients in recent years, is already shifting its focus to China with its K visa. Introduced in August, it’s already seen as an appealing alternative for skilled talent in the science and tech fields. Germany and Canada are not lagging behind, expressing their readiness to offer better conditions, such as generous rewards and stability, to tech professionals who have applied or intend to apply for the US H-1B visa program.

2. Innovation slowdown

The US tech industry risks stumbling in the AI race due to the STEM talent deficit. Jeremy Neufeld, director of immigration policy at the Institute for Progress, emphasizes that “the US’s singular advantage in the AI race has been its ability to draw the best minds from everywhere,” who would become the founders of leading AI startups.

Fei-Fei Li, a Stanford University researcher known as the “Godmother of AI,” Sundar Pichai, CEO of Alphabet, and Satya Nadella, CEO of Microsoft, are just a few examples of H-1B visa beneficiaries who have significantly contributed to AI innovation in the US.

Calling a $100,000 visa fee a “startup tax,” Neufeld warns that many startups, including AI-based, will be hit hard, further facing challenges in competing for local talent and sustaining their product roadmap, as reported by Bulletin. This may lead to fewer new tech businesses or their relocation abroad, harming the US startup ecosystem.

3. Strategic hiring shift

Even tech companies that can afford the $100,00 fee may refuse to participate in unpredictably politicized hiring frameworks. The rational move? Scaling globally, not locally. Tapping into tech markets abroad offers higher talent availability and reduced financial burden. As a result, R&D clustering may shift outside the US.

Software Nearshoring and Offshoring as Alternatives to the H-1B Visa

The shift towards building engineering hubs in Latin America and Eastern Europe is likely to accelerate as tech companies look to avoid high hiring costs and long immigration processes. These regions offer a total of 3.8 tech talents, about 50% cost-efficiency combined with top-tier tech skills, and cultural alignment with the US. This approach presents a valuable opportunity to remain competitive.

Rather than battling financial constraints of the H-1B program and shrinking ambitions, tech executives, like you, can simply build a software engineering team abroad, either through nearshoring or offshoring.

Nearshoring presupposes expansion into countries that are geographically close to the tech company’s HQ, such as those in Latin America. Offshoring, on the other hand, refers to overseas expansion, such as to Eastern Europe.

This business practice allows tech businesses to:

• access top tech talent without visa hurdles
• slash labor costs by up to 50% on senior developers’ salaries
• keep their roadmap on track & stay competitive.

Now, let’s see what Latin America and Eastern Europe, the go-to nearshoring and offshoring regions, have to offer.

Latin America

• 2M+ tech professionals with the highest availability of talent in Mexico (800K), Brazil (540K), and Colombia (165K). These software engineers are particularly well-versed in Java, .NET, Python, Ruby, C++, C#, React, and Node.js technologies.
• 173K+ STEM graduates enhance the region’s tech talent pool every year, gaining tech-savviness from the 24 Best Global Universities for Computer Science in LATAM, along with local initiatives like Mexico’s Codeacademy and Chile’s Digital 2035 plan.
• Senior developer salaries are up to 50% lower compared to the US, with DevOps compensation ranging from $58K to $86K annually.
• The top 16 on the Coursera ranking are taken by Chile, Mexico, Argentina, and Colombia, showing exceptional tech skills in the region.
• Western work ethics, developed as a result of a long-standing history of cooperation with the US tech companies, make LATAM engineers ideal for team integration.
• 1-4 hour time difference with the US facilitates team productivity and enhances the software development process overall.

Nearshoring to LATAM is not reserved for large tech companies only. Franki, a US startup, was looking to supercharge its experience app. By entering Mexico with Alcor navigation, they got:

• 7 senior Mobile devs hired & onboarded at the beginning of our cooperation
• 4-week average time to hire, with all developers acing probation
• 100% compliance with Mexican laws & liability shield from Alcor
• Full-fledged EOR support with B2B contracts, benefits, bonus salaries, and PTO.

Thanks to their development team in Mexico, Franki doubled its revenue and achieved a 30% month-over-month growth in 2024.

Compare the differences between outsourcing in South America and outsourcing software development to Eastern Europe in greater detail!

Eastern Europe

• 1.8M+ tech experts with the largest pools in Poland (650K developers) and Ukraine (302K programmers).
• 124K+ STEM graduates enter the workforce annually, holding diplomas from 80 higher education institutions listed on the QS World University Rankings 2025.

• Ranked top 39 globally on TopCoder, Poland, Ukraine, and Romania demonstrate the best tech savviness in the Eastern European region.

• Senior developer salaries are 46% lower compared to the US, with AI Engineer remuneration ranging from $60K to $81K annually.

• B2-C1 English proficiency of Eastern European developers allows your tech team to maintain effective communication and benefit from prompt feedback implementation.

• Western cultural values and business ethics allow Eastern European engineers to integrate smoothly into the US corporate culture and adapt to new working conditions with ease.

Leveraging the potential of Eastern Europe can boost your software development capabilities and even lead to a one-in-a-lifetime acquisition by a major tech company. A living proof of this is Dotmatics. With the help of Alcor, they built an R&D team of 30+ engineers, enabling them to overtake their competitors in the development of scientific software and successfully secure an acquisition by Siemens. See yourself:

Stay Competitive with Alcor’s Tech R&D Center Solution

Alcor’s tech R&D center is an alternative to traditional IT outsourcing and generic EOR platforms. It combines tech recruitment, EOR services, and ops support into an all-in-one solution, allowing tech companies to scale their tech teams from 10 to 100 developers in a year.

When tech companies go with nearshoring or offshoring strategies, they often face a dilemma of choosing the most suitable cooperation model.

• Some opt for IT outsourcing, which often harms their pocket and software product due to tricky rate cards and bench-focused staffing with no control over the team and inflated buyouts.
• Others explore Employer of Record platforms that lack tech focus and customization, offer limited human support, and usually come with hidden fees in fine print.

Alcor, with its software R&D center solution, disrupts the traditional IT outsourcing models and generic EOR, offering:

• Individually vetted talent of Silicon Valley caliber in LATAM & EE
• 40% cost reduction compared to IT outsourcing
• One contractually-bound service fee without prepayments & hidden fees
• Full dev team integration into your culture & practices from day 1
• No exit fees or 5-figure buyouts – insource any time for free

We combine all essential services under one roof for you to smoothly enter the LATAM or Eastern European markets in just one month:

End-to-end recruiting: Our 40 local tech recruiters need 2-6 weeks to hire the top 10% of talent, scaling your team from 10 to 100 developers in a year. 98.6% of our hires pass probation and demonstrate a 90% retention rate.

EOR for tech: Hire developers entity-free on FTE or B2B engagement models with Alcor’s liability shield. We take admin and legal complexities off your shoulders, including onboarding/offboarding, compliance with local laws, payroll, and benefits management. Use the Alcor Platform to streamline workflows and team management while staying focused on your product.

Operational support: If you need something extra, like leasing an office or procuring equipment, we’ve got your back. You’re never alone with any issues, as our Customer Success Managers provide 24/7 in-country assistance.

The US tech companies like BigCommerce, ThredUP, People.ai, and Sift are already supercharging their software products with R&D teams built via Alcor.

Fill the form below and explore the benefits of the R&D center for your tech business!