US, Nov 14 : A new US bill targeting outsourcing, the Halting International Relocation of Employment (HIRE) Act, could significantly disrupt India’s $280-billion IT, BPO, and Global Capability Centre (GCC) sector, which earns over 60% of its revenue from the American market, according to the Global Trade Research Initiative (GTRI).
Key Provisions of the HIRE Act
Introduced in the US Senate on September 5, 2025, the proposed legislation seeks to:
Impose a 25% excise tax on payments by US companies to foreign service providers, even for work performed entirely outside the US.
Disallow tax deductibility for such payments, making offshore operations costlier.
GTRI analysts note that these measures could prompt US firms to renegotiate contracts, increase onshore staffing, or slow new outsourcing deals, potentially impacting high-volume functions like application maintenance, back-office operations, and customer support.
Even captive GCCs of US multinationals in India may not be insulated, as the tax applies to payments benefiting US consumers. Indian companies may face margin pressure, higher local hiring in the US, or faster pivoting toward higher-value digital, AI, cybersecurity, and consulting services.
Bill Status and Political Context
The HIRE Act, introduced by Senator Bernie Moreno (R-Ohio), is still at a preliminary stage, with no committee hearings or co-sponsors yet. Its passage is uncertain, as US tech and services firms are expected to lobby against provisions that raise operating costs. Nevertheless, GTRI cautions that it reflects growing political pushback in Washington against offshoring.
GTRI’s Outlook
The report highlights that India’s IT sector must monitor the bill closely and prepare for a scenario where the US structurally rethinks outsourcing policies, potentially reshaping the global IT services landscape.