Washington, D.C. – Senator Bernie Moreno (R-Ohio) has introduced the Halting International Relocation of Employment Act (HIRE Act), a legislation aimed at discouraging U.S. companies from outsourcing jobs abroad. The bill proposes a 25% tax on outsourcing payments made to foreign workers and prohibits companies from deducting such expenses. The revenue collected would be directed into a new Domestic Workforce Fund to support apprenticeships and middle-class workforce development.

While college grads in America struggle to find work, globalist politicians and C-Suite executives have spent decades shipping good-paying jobs overseas in pursuit of slave wages and immense profits – those days are over,” said Moreno. “It’s time to fight for working class Americans and ensure they can work and retire with dignity. If companies want to hire foreign workers instead of Americans, my bill will hit them where it hurts: their pocketbooks.

Senator Moreno emphasized that the legislation targets corporations sending jobs overseas for cheaper labor, declaring: “If companies want to hire foreign workers instead of Americans, my bill will hit them where it hurts: their pocketbooks.”

Key Provisions of the HIRE Act:

• 25% outsourcing tax on payments to foreign workers.

• No tax deductions allowed for outsourcing expenses.

• Creation of a Domestic Workforce Fund for training and apprenticeship programs.

Impact Analysis on the Indian IT Industry

India’s $250+ billion IT services sector, dominated by firms like TCS, Infosys, Wipro, HCLTech, and Tech Mahindra, is a major beneficiary of U.S. outsourcing. Nearly 60-65% of Indian IT revenue comes from U.S. clients, primarily in banking, healthcare, retail, and manufacturing industries.

1. Cost Competitiveness Threatened – The 25% outsourcing tax would increase the effective cost of hiring Indian IT companies. U.S. corporations might be forced to reevaluate contracts, reducing the attractiveness of offshoring.

2. Shift Toward Onshore Hiring – Clients may push Indian IT giants to expand local U.S. hiring and delivery centers instead of relying on offshore teams in India. This could raise operating costs for Indian firms but help them retain business relationships.

3. Pressure on Margins – With U.S. being the largest revenue contributor, Indian IT companies may face margin compression as clients negotiate pricing to offset the tax impact.

4. Potential Favor for Global Capability Centers (GCCs) – Many multinational corporations have already established GCCs in India. If outsourcing to third-party vendors becomes expensive, GCCs (which are captive units and not vendors) may see relative advantages.

5. Geopolitical Trade Considerations – India and the U.S. have deep tech and trade partnerships. It remains to be seen if the Indian government will lobby against such a tax, citing its negative effect on global competitiveness.

Conclusion

The HIRE Act, if passed, could significantly alter outsourcing economics for U.S. companies and create short-to-medium term challenges for Indian IT firms. While the bill aims to boost American jobs, it risks disrupting established global delivery models that have made U.S. companies more cost-efficient. Indian IT majors will likely respond by accelerating onshore hiring in the U.S., investing in automation, and diversifying into other global markets to mitigate risks.