TLDR: Indian-founded AI startups are encountering significant difficulties in hiring tech talent in the United States due to tightened visa regulations, including new H-1B fees and increased immigration anxieties. This forces startups to adapt their hiring strategies, often looking for US citizens, green card holders, or F-1 visa holders, and in some cases, shifting engineering roles back to India. The challenges are impacting their ability to scale and engage with clients in the crucial US market.
Indian-founded artificial intelligence (AI) startups are facing substantial obstacles in securing tech talent for their US-based operations, primarily due to stringent visa regulations and a climate of immigration uncertainty. This situation is compelling these nascent companies to rethink their hiring strategies and operational models in one of the world’s leading AI ecosystems.
According to reports from October 21, 2025, a combination of new H-1B visa fees and heightened immigration anxieties has made visa holders hesitant to transition from established large tech firms to smaller, riskier startup ventures. This reluctance is particularly pronounced among H-1B visa holders, who are wary of potential disruptions to their immigration status. Sukanya Raman, India head at Davies & Associates, clarified that the reported $100,000 fee does not apply to H-1B transfers, yet the overall sentiment of uncertainty persists.
Founders emphasize the critical need for a physical presence in the US, which often serves as their largest market. Aravind Jayendran, co-founder of agentic AI startup LatentForce, highlighted the challenge of conducting business remotely, stating, “There is a limit as to how much we can do online… If you cannot meet customers in person, it makes you handicapped as you are not getting sales.” Jayendran himself is struggling to secure a B1/B2 visa for crucial client meetings, with appointment wait times in India ranging from three-and-a-half to nine months. Siddhant Mohan, whose company Qodex focuses on API testing and security, noted increasing denial rates for O-1 specialty non-immigrant visas, which are preferred by many Indian founders for establishing a US presence. While O-1 visa approvals for Indians increased to 1,375 in FY24 from 210 in 2018, the rising denial rates add to the uncertainty.
To adapt to these hurdles, startups are increasingly targeting US citizens, green card holders, and F-1 visa holders (students with temporary work authorization through the Optional Practical Training program) for technical roles. These positions often require specialized expertise in areas like generative AI, coding, and core engineering. However, this strategy presents its own challenges, as startups must compete with larger companies offering more attractive compensation packages. One founder lamented, “We are competing for people who have four-five offers from larger companies, with bigger pay packages.” Himanshu Tyagi, co-founder of Sentient Labs, pointed out the high cost of local talent, stating, “The only other option is to hire local talent, which is extremely expensive, and we cannot wait since time is of essence when it comes to AI.”
Some Indian AI startups, including Composio, Smallest.ai, and Atomicwork, have already relocated founders to the US to be closer to their customer base and tap into the rapidly expanding generative AI talent ecosystem and venture capital opportunities. However, the tightened visa rules are forcing a broader recalibration of strategies. Companies like Qodex are shifting hiring for engineering and technical teams to India, while focusing on local hires in the US for business development roles. Neeti Sharma, CEO of TeamLease Digital, suggests that stricter visa rules might push Indian firms to localize US operations, a strategy that created over 175,000 jobs during a previous administration, but also increases costs and limits scalability.
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The situation underscores the critical importance of flexible international expansion strategies and proactive planning for Indian AI startups to thrive amidst evolving US immigration policies.
