H-1B fee shock: SaaS and AI startups rethink hiring strategy as $100,000 levy threatens talent flow

Indian SaaS and AI startups are rapidly reworking their U.S. expansion and hiring plans after a proposal in Washington to impose a $100,000 annual fee on H-1B visas. If enacted, the levy would sharply raise the cost of relocating engineers, product leaders, and managers to the world’s largest software market, potentially reshaping global talent flows and accelerating a shift toward distributed teams.

Why it matters

The H-1B program has long powered Silicon Valley’s growth by enabling U.S. companies to hire foreign specialists in fields like software, engineering, and medicine. Indian professionals receive a substantial share of these visas annually, making the program a critical pathway for founders, operators, and senior technologists who help build and scale startups in the U.S. A dramatic fee hike would force a fundamental rethink of where and how talent is deployed.

Founders and executives react

For many startup leaders, the proposed fee upends long-standing assumptions about the return on investing in U.S. education and early-career roles.

“The fee makes the traditional MBA or master’s route in the U.S. much harder to justify,” said Shantanu Gangal, co-founder and CEO of Prodigal. “For many students, the return on investment won’t add up.”

Arvind Parthiban, co-founder and CEO of SuperOps, echoed the sentiment: “Hiring NRIs in the U.S. will become tougher. We have to rethink and hire talent where it makes sense, not necessarily in the U.S.”

Some founders argue the shift could accelerate a reverse brain drain to India. “What looks like the end of the road for Indian H-1B holders could actually mark the beginning of a tech renaissance in India,” said Rituparna Chakraborty, Partner India at executive search firm TrueSearch.

An AI startup founder noted that alternative pathways still exist for core leadership. “For SaaS firms, so long as the founder and a couple of key folks can come on O-1 or L-1 and build a local team, they’ll be fine. The H-1B system was never really built for them… The American dream for outside folks, just migrating, that is decidedly over, whether SaaS or not.”

Yet there is concern that a steep levy could act as a wall against global talent. “Engineers in AI are judged by what they can build, not where they studied,” added Gangal. “AI is flattening borders even as immigration policies tighten them. My advice to young talent: don’t wait for a visa, start building now, and the market will find you.”

Rethinking hiring and operating models

Many SaaS companies already rely on U.S. revenues and go-to-market teams while keeping product and engineering distributed across cost-effective hubs. The proposed fee is accelerating that direction.

“We’ve been hiring local talent in the U.S. for GTM roles for some time,” said Gaurav Sharma, founder and CEO of SaaS Labs. “For sending people, we still have options like L-1 and B1/B2 visas. This ruling will likely be challenged.” He added that the long-term effect could be positive: “In the short term, we’ll hire more locally in the U.S. But we’ll also explore hubs like Mexico, Canada, and Dublin. This will push SaaS and AI companies to do more with less and adopt AI faster.”

Startups are mapping out new hubs and talent strategies:

• Strengthen local U.S. hiring for sales, partnerships, customer success, and enterprise support.
• Expand nearshore and offshore hubs in Mexico, Canada, Dublin, Eastern Europe, Latin America, Vietnam, and the Philippines.
• Rely on O-1/L-1 pathways for founders and key leaders to establish or scale U.S. presence.
• Adopt remote-first operations and invest in collaboration tooling to maintain velocity.
• Accelerate AI-enabled productivity to offset higher compliance and hiring costs.

SaaS Labs, which already operates from Poland, plans to double down on Eastern Europe while growing U.S. sales teams. Other founders are similarly evaluating Latin America and Southeast Asia for cost-effective, multilingual talent across support, SDR, and engineering roles.

Reverse brain drain and India’s opportunity

The proposed fee coincides with a wave of Indian SaaS founders and executives who had been relocating to the U.S. to stay close to AI and enterprise customers. A sharp cost barrier could redirect that momentum back to India’s maturing tech ecosystems.

“The $100,000 H-1B fee is nothing short of a wall against talent,” said Sanjay Tripathy, co-founder and CEO of Briskpe. “The U.S. risks stalling its own innovation engine. India, meanwhile, is ready to absorb this talent. Cities like Bengaluru, Hyderabad, and Pune will gain from this shift. What America loses, India stands to gain.”

Chakraborty of TrueSearch sees a deeper, long-term advantage for the Indian ecosystem: returning professionals bring global standards in product, security, and GTM. “Startups now have access to world-class talent returning home with global exposure, especially from Silicon Valley. Companies built on distributed models can seamlessly integrate this pool, and India’s IT industry stands to gain new muscle enriched by global best practices. This moment, though unsettling for individuals, could ignite a revolution in India’s SaaS and AI landscape.”

The road ahead

Industry watchers expect large tech firms, many of which rely heavily on H-1Bs, to lobby for changes or delays. But startups are less likely to wait. With many already remote-first, a sharp rise in visa costs may simply accelerate their shift to distributed hiring and targeted U.S. presence for GTM.

For founders, the calculus is clear: keep core engineering where it’s most efficient, place customer-facing roles close to buyers, and use selective leadership transfers to bridge markets. Whether or not the fee is implemented as proposed, the era of defaulting to U.S.-based teams for growth is giving way to a more flexible, global playbook—and a new balance of innovation power across hubs.