Six months after Senator Bernie Moreno introduced the Halting International Relocation of Employment Act, the bill is going nowhere fast. As of early 2026, S. 2976 sits in the Senate Finance Committee with no co-sponsors and no committee hearings since its introduction in October 2025. GovTrack's automated prognosis assigns it a 0% chance of enactment. For companies that rely on offshore service work, that's not an all-clear signal. It's a pause.
What the Data Shows
The HIRE Act would amend the Internal Revenue Code to impose an excise tax on payments by US taxpayers to foreign persons for services provided to US consumers. IT services, call centers, software development, shared service centers, back-office operations: all of it falls in scope. The bill doesn't name India specifically, but India's technology sector would likely be among the most affected industries given the scale involved. According to Wisemonk's India IT Services Analyst Report 2026, India's IT-BPM sector generated $297 billion in FY25 and is projected to reach $315 billion in FY26, commanding a 13 to 15% share of the global IT services export market, up from roughly 10% in FY18. The US is the dominant buyer in that market. A 25% excise tax on cross-border service payments isn't an abstraction for this ecosystem. It's a direct hit on the core revenue model of an industry employing 5.95 million professionals.
Where the bill turns genuinely alarming is the arithmetic behind the 25% headline rate. The bill would create a 25% excise tax on any fee, royalty, or service charge paid to a foreign person for labor or services benefiting US consumers, while also denying a deduction for any of those outsourcing payments. The combined effect: a $100 outsourcing payment that currently costs about $79 after tax savings would cost $125 under the HIRE Act, a 58% jump. That's not a rounding error. That's a structural shift in the economics of offshore hiring.
The scale of what would be repriced matters here. The same Wisemonk IT report documents that India offers a 70 to 85% cost advantage over the US for equivalent technical roles. A mid-level engineer costs approximately $20,000 annually in India versus $130,000 in the US. Even after absorbing a 58% cost increase under HIRE Act math, an India-based engineer would still be meaningfully cheaper than a US hire. That doesn't make the bill harmless. It means the companies with the thinnest margins and the least pricing flexibility, mid-market software firms, regional BPOs, startups running lean engineering teams offshore, face the sharpest squeeze, while large enterprise buyers have more room to absorb or restructure.
Despite those stakes, the bill has seen no committee hearings and attracted no new co-sponsors since its introduction. In September 2025, Moreno attempted to pass the bill via unanimous consent on the Senate floor; Senate Democrats blocked the move, ensuring it must go through the standard committee process. Congress.gov shows the only action on record is its referral to the Senate Finance Committee on October 6, 2025. Most bills that don't move in the first few months simply don't move.
What This Means
The stall doesn't mean the idea is dead. Moreno's bill reflects a protectionist current that runs across both parties, and the zero-co-sponsor count is partly a function of timing. The bill has seen no movement partly because the emergence of a US-India bilateral trade framework suggests the administration is prioritizing negotiated trade concessions over broad excise taxes. But "not right now" isn't the same as "not ever." The bill could resurface as a bargaining chip in broader tax or trade negotiations, or return with amendments that narrow its scope enough to attract Republican allies.
For companies relying on traditional outsourcing vendor contracts, the uncertainty itself has real implications. Analysts at Hunton Andrews Kurth have flagged that as companies approach long-term outsourcing contracts, they need to consider negotiating for exit or cost-shifting provisions that address changes in the regulatory environment which increase the cost of obtaining outsourced services. Multi-year agreements signed without change-in-law clauses are now legitimate legal exposure. For companies managing HR and payroll operations in India through vendor contracts, this is precisely the kind of structural review that the HIRE Act's dormancy period makes possible and necessary.
Here's where the structure of how you hire actually matters.
The HIRE Act, as written, targets payments from US taxpayers to foreign persons for services directed at US consumers. That framing fits traditional vendor-client outsourcing contracts squarely: a US company pays a third-party firm abroad for a deliverable. Employer of Record arrangements work differently. With an EOR, the talent is your team rather than a vendor's; the EOR simply keeps the structure legal. In an EOR model, an Indian entity is the legal employer and the US company builds and manages its own workforce, rather than purchasing services through a third-party provider. Wisemonk operates this model for 300+ global companies across India, and the structural distinction it creates, between building a captive workforce and purchasing a vendor deliverable, is the same distinction that gives EOR arrangements a meaningfully different legal posture under the HIRE Act framework. How any implementing regulations under a HIRE-style law would treat EOR arrangements isn't yet settled, but that distinction is legally significant and worth understanding well before any version of this legislation advances.
The broader investment picture also matters for how companies should calibrate their response to this legislative risk. Wisemonk's India Investment Intelligence 2026 report shows that $81 billion in FDI flowed into India in FY2025 alongside $43 billion in PE/VC investment, with VC deal volumes surging 45% year-over-year. India's 1,700+ Global Capability Centers now generate $64.6 billion in annual revenue and are projected to reach $99 to $105 billion by 2030. These are not vendor relationships that a 25% excise tax would unwind. They are owned, multi-year strategic investments by global companies that have already moved beyond the outsourcing contract model the HIRE Act is designed to discourage. The capital continues flowing into India precisely because the structural case for building teams there is independent of any single legislative cycle.
What to Watch Next
The Senate Finance Committee's workload is the first variable to watch. If the committee stays focused on the broader reconciliation package through mid-2026, the HIRE Act has no realistic path to a hearing. But if Moreno files HIRE-related amendments to other tax legislation, the calculus shifts immediately.
Watch the co-sponsor count. The bill currently sits at zero, and a lack of bipartisan support has been a consistent indicator of stalled momentum. Even one or two additions from Finance Committee members would change the picture. A senator with real committee leverage picking up the bill matters far more than floor speeches.
The broader diplomatic environment is also relevant. A February 2026 joint statement from the White House announced a framework for an interim bilateral trade agreement between the US and India, with movement on tariff levels. That kind of diplomatic engagement tends to work against punitive excise taxes in the near term. India's macroeconomic position reinforces why this relationship has strategic weight: GDP growing at 7.3% annually, foreign exchange reserves at $728 billion, and a tech workforce producing over 2.5 million STEM graduates per year, per Wisemonk's investment report. A country at that scale and trajectory is a partner the US negotiating apparatus has strong structural reasons to work with rather than penalize through blunt excise mechanisms. But trade frameworks shift, and the protectionist sentiment behind bills like the HIRE Act doesn't depend on any particular diplomatic calendar.
Companies scaling India teams during this period also need to manage the compliance architecture that sits beneath the legislative risk. Payroll compliance in India covers TDS withholding, PF and ESI contributions, gratuity provisioning, and state-level obligations that don't pause while Washington debates excise taxes. And companies moving from vendor contracts toward direct employment structures in India need to understand permanent establishment risk: engaging employees without a proper legal employer structure can create taxable presence in India, a compliance liability that exists entirely independently of the HIRE Act question.
The bill's stall is real. So is the policy risk underneath it. Companies with significant offshore development and service operations should treat this quiet period as an opportunity to audit existing agreements, examine the legal structure of their foreign hiring arrangements, and build flexibility into any multi-year deals being negotiated now. Waiting for committee hearings before starting that work is waiting too long.