After putting high taxes on Indian products, the US is looking at another option: possible taxes on IT services, foreign workers working from abroad, and outsourced business tasks. Along with plans to change the H-1B visa system and higher taxes on money sent home by Green Card holders and temporary workers, these steps suggest a bigger plan that could limit India’s biggest export: its human resources, including engineers, coders, and students—who support both Silicon Valley and the IT services industry in the US.
The discussion started when a conservative commentator, Jack Posobiec, posted on X saying, “All outsourcing should be taxed” and that foreign countries must “pay for the privilege of working remotely for the US in the same way as they pay for goods.” He said the idea could apply to different industries and be adjusted for each country. The post was later shared by Peter Navarro, the Senior Counsellor for Trade and Manufacturing, showing that these ideas are getting attention from top decision-makers in the White House.
What will happen if these taxes are introduced? If they are put into place, it could change how global outsourcing works. Charging taxes on foreign workers working remotely from the US would make it more expensive to provide IT and back-office services, leading companies to reconsider their contracts or raise prices. Some businesses might decide to bring work back to the US, which could cause delays, affect supply chains, and reduce the profits of Indian IT companies that rely on the US market.
India’s IT and services sector is a key part of its economy. Every year, millions of engineering and computer science graduates enter the job market, creating a steady supply of talent for IT and Business Process Outsourcing (BPO) companies. Firms like Infosys, TCS, Wipro, Cognizant, and HCL are major supporters of the H-1B visa program, which allows skilled workers to live and work in the US for a number of years. India’s most important export to the US is not physical goods, but the people—its software engineers, data scientists, IT consultants, and students.
These major IT firms have been essential to the US’s digital transformation efforts, offering software development, cloud services, and large-scale outsourcing. Any move to tax services could therefore hurt a sector that supports employment and India’s position in the global economy. Beyond the financial effects, such policies could stress diplomatic relations, make it harder for talent to move between countries, and push Indian companies to find new international markets.
Alongside these service taxes, the US is also making it harder for people to get visas, which is a major way India sends its IT workers to the US. H-1B visas have been a key part of India’s IT export model, letting professionals work on-site in the US, build relationships with clients, and help deliver projects. Recent proposals aim to limit the length of time international students, cultural exchange visitors, and foreign journalists can stay in the US, claiming this is to improve oversight and stop misuse.
The US has also raised taxes on money sent abroad by non-citizens. India is the world’s biggest receiver of money sent from overseas. “The US tax on remittances sent to other countries is raising concerns in India, which could lose billions of dollars in foreign currency each year if the plan is passed,” the Global Trade Research Initiative (GTRI) told The Hindu. According to data from the Reserve Bank of India, the US is the main source of remittances to India, making up 27.7% of the total remittances in 2023-24.
