Outsourcing to India’s $250B IT Industry May Soon Become Too Expensive for U.S. Businesses

Quick listen: A viral Trump-aligned post and the HIRE Act put India’s $250B IT industry on notice. Here’s what U.S. firms and agencies need to do next.

It all started with a tweet from Laura Loomer, a political commentator known for her connections to President Donald Trump’s inner circle.

She posted on Saturday that Trump is considering blocking U.S. companies from outsourcing IT work to India.

Loomer also added that Americans would no longer need to "press 2 for English," a line that sparked strong reactions on both sides of the outsourcing conversation.

The tweet ended with the line, "Make Call Centers American Again," a version of the president's slogan, "Make America Great Again."

Loomer's tweet went viral, now having 2.2 million views, 65,000 likes, 11,000 reposts, and 4,200 comments.

Within days, the Indian tech community and U.S. companies that rely on offshore partners were scrambling to understand whether it was just talk or a signal of real policy change.

Soon after, attention turned to the Halting International Relocation of Employment (HIRE) Act, introduced by Republican Sen. Bernie Moreno.

The bill proposes a 25% surcharge on payments made by U.S. companies to foreign firms for any services that benefit U.S. consumers.

It would also block those companies from deducting such payments for tax purposes.

The financial impact would be immediate.

Outsourcing IT contracts would become significantly more expensive, and service providers abroad, including agencies and freelancers, could see U.S. demand drop.

The HIRE Act includes provisions to prevent companies from rerouting payments through subsidiaries or U.S. territories, effectively cutting off workarounds.

At the center of all this is India’s IT sector, which depends heavily on American contracts.

With an estimated $250 billion in value and more than 50% of revenue tied to the U.S., any kind of disruption will hit hard.

The bill is still early in the legislative process and still lacks backing from the White House, but the political tone has already shifted.

For now, what’s clear is that the outsourcing model is under pressure, from policy, from politics, and from public perception. 

Why This Bill Has the Industry on Alert

The proposed tax raises direct questions about the long-term sustainability of offshore IT models.

India’s major IT firms earn more than half of their revenue from U.S. clients.

A 25% surcharge plus the removal of deductibility could make outsourcing significantly more expensive.

If a $100 payment is taxed and no longer deductible, the real cost could rise to around $146, once you factor in the added tax and the extra income taxes from losing the write-off.

This doesn’t just affect call centers.

The proposed law would apply to services ranging from software development and data analytics to cybersecurity, design, and project management.

India recently removed its intermediary clause from the GST framework, which had been limiting export tax benefits.

This move improves the outlook for Indian IT exporters, but it won't fully offset the impact of U.S. policy changes if this bill gains traction.

Our Take: What Business Leaders & Agencies Should Do Now

The HIRE Act is a policy proposal, but the industry impact is already unfolding.

For businesses, agencies, and platforms like DesignRush, this moment calls for planning and strategic flexibility.

Here’s how different groups can prepare.

For U.S. firms relying on offshore providers:

If your business depends on offshore IT or support, now is the time to prepare your internal models and external messaging.

• Update your financial models to reflect a possible 25% surcharge and the removal of related tax breaks.
• Look into other delivery models, such as closer time zones, local teams, or automation tools that ease the load.
• Start the conversation with clients and partners now, before cost or timing becomes a surprise.

There’s no need to cut ties, but you should have a clear plan in place in case the regulation actually shifts.

For outsourcing agencies and global capability centers:

• Start building relationships in markets beyond the U.S. Look to Europe, the Middle East, and Southeast Asia for long-term growth.
• Refocus positioning on specialized skill sets, not just cost advantage
• Use India’s recent GST reforms to strengthen your value proposition as an export-ready provider

This is not just a challenge. It’s an opportunity to reset how you talk about your business and who you serve.

Being part of a professional directory like DesignRush gives agencies visibility and credibility when clients are making faster, risk-sensitive decisions.

It also creates a layer of trust, something U.S. companies will be looking for more of as outsourcing models come under pressure.

When clients are weighing risk and trust, being listed on the right platform becomes part of your pitch.

The agencies that respond fast, stay transparent, and make it easier for clients to adapt are the ones that will be remembered.

Meanwhile, five industries are already rethinking digital strategies as the newly imposed Trump tariffs disrupt buyer behavior.

Shifts in regulation demand agility. Partner with outsourcing experts who can reframe delivery models while keeping client trust intact.