India’s large IT sector is facing a prolonged period of uncertainty due to a proposed U.S. bill. The legislation aims to impose a 25% tax on American companies that use foreign outsourcing services. Although the bill is unlikely to pass in its current form, analysts and lawyers believe it could fundamentally change how major firms in the world’s largest outsourcing market procure IT services.
The “HIRE Act,” introduced by U.S. Senator Bernie Moreno, proposes taxing companies that hire foreign workers over Americans. This comes at a particularly bad time for India’s $283 billion IT sector, which is already struggling with weak revenue growth as U.S. clients delay or renegotiate contracts amid inflationary pressures and tariff uncertainties. Experts predict that if the bill were to pass, U.S. companies that heavily rely on overseas IT services would likely face increased costs. This would set the stage for extensive lobbying and legal challenges.
