From Brain Drain to Brain Gain: How the HIRE Act Could Spark India’s Tech Renaissance
Rakesh Krishnan Simha · 10/25/2025 - The HIRE Act proposes a 25% outsourcing tax, making U.S. contracts with Indian IT firms significantly more expensive and non-deductible for tax purposes.
- Indian IT, which earns over 60% of revenues from U.S. clients, faces pricing pressure, renegotiations, and potential nearshoring shifts to Mexico or Canada.
- Engineers in India, already hit by stagnant salaries and currency depreciation, could see further stress as clients push for onshoring and cost cuts.
- While the Bill signals rising U.S. economic nationalism, many expect it to be watered down due to corporate pushback and global interdependence.
- The disruption may catalyze India’s IT sector to move beyond wage arbitrage into higher-value innovation, AI, and startup ecosystems, fueling a reverse brain drain.
Rakesh Krishnan Simha
Rakesh Krishnan Simha is a globally cited defense analyst. His work has been published by leading think tanks, and quoted extensively in books on diplomacy, counter terrorism, warfare and economic development. His work has been published by the Hindustan Times, New Delhi; Financial Express, New Delhi; US Air Force Center for Unconventional Weapons Studies, Alabama; the Centre for Land Warfare Studies, New Delhi; and Russia Beyond, Moscow; among others. He has been cited by leading organisations, including the US Army War College, Pennsylvania; US Naval PG School, California; Johns Hopkins SAIS, Washington DC; Centre for Air Power Studies, New Delhi; Carnegie Endowment for International Peace, Washington DC; and Rutgers University, New Jersey.
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