US' Proposed HIRE Law Puts Indian IT Firms, GCCs in a Fix

Experts contend that American corporations are likely to push back against the legislation

- AVIK DAS

A proposed US law that imposes a 25 per cent tax on companies that outsource work threatens to upend the economics of Indian IT and global capability centres (GCCs).

According to industry and tax experts, US companies may see their tax burden surge by almost 60 per cent due to this.

If enacted from January 1, 2026, US companies would need to carefully reevaluate their global sourcing strategies. This is because the combined impact of excise, state, and local taxes could dramatically increase the cost of engaging foreign labour and services.

US Republican senator Bernie Moreno of Ohio introduced the Halting International Relocation of Employment (HIRE) Act, and the legislation — if passed — will impose a 25 per cent tax on any company that employs foreign labour instead of Americans.

It will use the generated revenue to fund workforce development programmes to help the US middle-class.

The Act defines outsourcing as any premium, fee, royalty, service charge, or other payment made by a US company or taxpayer to a foreign person with respect to labour or services the benefit of which is directed, directly or indirectly, to consumers located in the United States.