IT Jobs News: India’s $283 billion information technology (IT) industry, one of the country’s largest job creators, may be staring at headwinds as the US debates a new outsourcing tax.
Analysts warn that the move could affect not only company revenues but also future hiring and job stability in India’s IT sector, which employs over 5 million people.
The HIRE Act and Its Impact
The trigger is the HIRE Act, introduced by US Republican Senator Bernie Moreno. The bill proposes a 25% tax on US companies outsourcing services overseas and bars them from treating such expenses as tax-deductible.
If enforced, the bill will make outsourcing more expensive for American companies and could force them to scale down contracts with Indian IT firms such as TCS, Infosys, HCLTech, Tech Mahindra, Wipro, and LTIMindtree.
Risk to India’s IT Jobs
For decades, India has been the outsourcing hub of the world, creating lakhs of jobs in software development, customer support, cloud services, and digital transformation. But if US companies pull back, the first casualty will be jobs and fresh hiring in India’s IT sector.
Saurabh Gupta, President of HFS Research, told Reuters, “When political noise turns into regulatory risk, clients quickly insert contingencies, reopen pricing, and demand delivery flexibility. Clients will simply take longer to sign, longer to renew, and longer to commit transformation dollars.”
That delay means slower growth, fewer projects, and ultimately, fewer job opportunities for India’s tech workforce.
The Numbers Behind the Concern
Currently, the US accounts for the majority of revenues for Indian IT firms. Even a small pullback could directly translate into reduced hiring plans, tighter salary budgets, and lower increments.
Compliance expert Jignesh Thakkar from EY India told Reuters, “The HIRE Act proposes sweeping changes that could alter the economics of outsourcing and significantly increase the tax liability associated with international service contracts.”
If costs go up, US companies may outsource less, hitting both revenues and jobs in India.
Sector Already Under Stress
The IT sector is already facing weak revenue growth due to cautious US clients delaying non-essential spending amid inflation. Reports suggest several firms have frozen hiring or slowed down campus placements this year.
Now, with the proposed outsourcing tax, industry watchers fear that job growth could stall further, especially in entry-level roles that form the bulk of outsourcing contracts.
Possible Relief Ahead?
Experts say the bill may not pass in its current form. US companies that rely heavily on outsourcing are expected to lobby against it and, if needed, challenge it in court.
Sophie Alcorn, CEO of Alcorn Immigration Law, said, “A bill like this would probably face a lot of backlash from US companies that rely heavily on outsourcing.”
Even so, the uncertainty is enough to put pressure on Indian IT stocks and job sentiment. Industry body Nasscom has yet to comment, but experts expect firms to prepare contingency plans in case the law is diluted but still enforced partially.
The Road Ahead for Workers
The proposed tax strikes at India’s biggest advantage, cost competitiveness and abundant skilled workforce. While demand for tech talent in the US will remain strong due to skill shortages, Indian IT workers could face a slower pace of hiring, fewer onsite opportunities, and more competition for existing jobs.