AsianFin -- India’s $283 billion IT industry faces a period of heightened uncertainty as U.S. lawmakers debate a proposed 25% tax on American companies that outsource services abroad, analysts and lawyers said.

The measure, still in its early stages, is seen as unlikely to pass in its current form. However, experts warn it could mark the beginning of a gradual shift in how U.S. corporations—traditionally the largest clients of India’s outsourcing sector—procure IT services.

“Even if the bill stalls, the debate itself introduces new risks for long-term contracts,” said one lawyer advising multinational clients. Many U.S. firms are already delaying or renegotiating agreements in anticipation of potential cost increases, analysts noted.

Should the tax advance, firms heavily dependent on offshore services would face significant new expenses, likely sparking lobbying efforts and legal challenges in Washington.

India’s IT sector, which contributes more than 7% of GDP, has been a cornerstone of the country’s economic growth for over three decades. With marquee clients such as Apple, American Express, Cisco, Citigroup, FedEx, and Home Depot, the industry has long benefited from the U.S. market.