A new bill in the United States aims to slap a 25 percent tax on companies that hire workers from abroad. Introduced by Senator Bernie Moreno from Ohio on September 5, 2025, the HIRE Act targets outsourcing to boost American jobs and could shake up India’s massive tech industry.
This move comes amid growing calls to protect US workers from job losses overseas. It promises to fund training programs at home with the tax money, but experts warn it might raise costs for businesses and hurt global trade ties.
What the HIRE Act Means
The Halting International Relocation of Employment Act, or HIRE Act, focuses on payments made by US firms to foreign workers. If passed, it would add a 25 percent excise tax on any money sent abroad for services that benefit American consumers.
Supporters say this will stop companies from chasing cheap labor and keep jobs in the US. The bill sets up a Domestic Workforce Fund to use the collected taxes for apprenticeships and skill-building programs. This could help millions of American graduates find work in a tough job market.
Critics argue it might not solve unemployment and could lead to higher prices for goods and services. They point out that outsourcing has been a key part of global business for decades.
Recent data shows US outsourcing spending hit over 700 billion dollars in 2024, with much of it going to tech and back office work. The bill arrives as unemployment among young Americans stands at 8.2 percent, fueling political pressure for change.
How India Could Feel the Pain
India stands to lose big if the HIRE Act becomes law. The country’s IT and services sector brings in about 250 billion dollars a year, with more than half coming from US clients.
This tax would make it costlier for American companies to outsource to places like Bengaluru or Hyderabad. Indian firms such as TCS, Infosys, and Wipro rely on these deals for growth and jobs.
Experts predict a drop in contracts, leading to layoffs and slower economic progress. India’s tech exports to the US grew by 12 percent in 2024, but this bill could reverse that trend.
Smaller businesses in India might struggle more, as they lack the resources to shift operations. On the flip side, it could push Indian companies to invest in local US hiring or new markets like Europe.
- Key risks for Indian firms: Higher costs could cut profit margins by up to 15 percent.
- Job losses: Estimates suggest up to 500,000 positions in IT could be at risk over five years.
- Market shift: Companies might move more work to countries with lower taxes or better trade deals.
Reactions from Leaders and Experts
US politicians backing the bill call it a win for the middle class. Senator Moreno stated that global firms have shipped jobs away for too long, leaving Americans behind.
In India, industry groups express worry. Leaders from NASSCOM, a major tech association, say the tax ignores the benefits of global talent and could harm innovation.
Analysts note similar past efforts, like visa restrictions in 2017, which slowed H1B approvals but did not stop outsourcing entirely. This time, the tax approach might have more teeth.
Public sentiment in the US leans toward protectionism, especially after recent elections where job security was a hot topic. In India, social media buzzes with concerns about youth unemployment, already at 18 percent for those under 30.
One expert compared it to trade tensions in 2020, when tariffs on Chinese goods reshaped supply chains. India might need to negotiate better trade terms to cushion the blow.
Broader Economic Ripple Effects
Beyond IT, the HIRE Act could affect other sectors like manufacturing and customer support. Global companies might rethink strategies, leading to a more localized world economy.
For the US, it promises more revenue for workforce programs, potentially creating 200,000 new apprenticeships by 2030. However, businesses warn of reduced competitiveness against rivals in China or Europe.
India’s government might respond with its own measures, such as incentives for domestic tech growth. Recent events, like the 2024 US India trade pact, show strong ties that could help in talks.
A look at potential outcomes:
| Scenario | Impact on US | Impact on India |
|---|---|---|
| Bill Passes Fully | Boosts local jobs, raises 50 billion dollars in tax | IT sector shrinks by 10 percent, GDP hit by 1 percent |
| Bill Weakens in Congress | Minor cost increases, some outsourcing shifts | Mild slowdown, firms adapt with US branches |
| Bill Fails | Status quo, continued global hiring | Tech boom continues, exports rise to 300 billion by 2027 |
This table highlights how the bill’s fate could shape economies on both sides.
What Happens Next
The bill now heads to committee debates in Congress. With midterm elections looming in 2026, its chances depend on bipartisan support.
Experts advise watching for amendments that might soften the tax or exempt certain industries. India could lobby through diplomatic channels to protect its interests.
In the meantime, companies are already exploring options like nearshoring to Mexico or automating tasks with AI to cut costs.
Share your thoughts on how this bill might change global jobs. Comment below or spread the word to start a discussion.
