US H-1B Overhaul: Why India’s Tech Workforce Faces a Harder Road Ahead

The United States’ decision to scrap the lottery-based H-1B visa system and replace it with a weighted selection model marks the most consequential redesign of the programme in decades. For India — which accounts for the overwhelming majority of H-1B beneficiaries — the implications are stark. While the reform is being pitched as a move towards “merit-based” migration, it is likely to shut the door on thousands of entry-level Indian professionals who have traditionally used the H-1B route to access the US labour market.

What the New H-1B Rule Changes

Under the new regulation notified by the United States Citizenship and Immigration Services, the random lottery used to allocate H-1B visas will be replaced by a weighted selection process. This system will prioritise applications offering higher wages and requiring higher skill levels, while still nominally allowing applications across all wage bands.

The rule, issued by the US Department of Homeland Security, will come into effect on February 27, 2026, and will apply to the FY 2027 H-1B cap registration cycle. Each year, the change will affect roughly 85,000 visas — 65,000 under the general cap and an additional 20,000 reserved for applicants with a US master’s degree or higher.

Why the Trump Administration Is Scrapping the Lottery

The overhaul is part of President Donald Trump’s broader push to reshape skilled immigration. The administration argues that the lottery system was being “exploited” by employers to hire foreign workers at wages lower than those paid to Americans.

USCIS spokesperson Matthew Tragesser has said the random selection model incentivised volume-based filings rather than genuine skill shortages. A weighted system, the administration believes, will align visas more closely with economic value, productivity and wage levels.

Why Indian Applicants Are Most at Risk

In practice, the shift hits Indian applicants hardest. Indians receive over 70% of H-1B visas annually, many of them early-career professionals employed by IT services firms. These roles often fall in lower wage bands despite requiring technical qualifications.

A wage-weighted selection system inherently disadvantages such applicants. Entry-level engineers, analysts and junior consultants — the traditional backbone of India’s H-1B pipeline — are likely to be crowded out by senior professionals commanding higher salaries, often sponsored by US firms rather than offshore service providers.

The $100,000 Fee and the ‘Gold Card’ Signal

The visa rule must also be read alongside other measures introduced by the Trump administration. A presidential proclamation now requires employers to pay an additional $100,000 per H-1B visa — a move currently under legal challenge. This sharply raises the cost of hiring foreign professionals and tilts the system further towards high-margin firms and elite talent.

At the other end of the spectrum is Trump’s proposed $1 million “gold card” visa, which offers wealthy individuals a pathway to US citizenship. Together, these initiatives signal a clear policy direction: immigration access is increasingly being priced and filtered by economic value rather than opportunity.

Implications for India’s IT Services Model

For India’s IT sector, the changes strike at a long-standing operating model built on deploying young engineers to the US market. A weighted H-1B system, combined with steep visa fees, erodes the cost arbitrage that made this model viable.

Firms may be forced to accelerate shifts towards offshore delivery, near-shoring in third countries, or greater automation. For Indian graduates, the US pathway — once a defining aspiration — is set to become narrower, steeper and more competitive.

What This Means for US Employers

While the administration frames the reform as protecting American workers, the impact on US employers is mixed. High-paying sectors such as advanced technology, AI and specialised healthcare may benefit from a more predictable selection of senior talent. But startups, universities and smaller firms — which rely on younger, less expensive foreign professionals — could find themselves priced out.

The promise that all wage levels will still have “opportunity” under the new system remains largely theoretical.

A Structural Shift in Skilled Migration

The end of the H-1B lottery reflects a deeper philosophical shift in US immigration policy. Skilled migration is no longer being treated as a broad talent pipeline, but as a narrowly curated economic instrument. For India, this means that access to the US labour market will depend less on numbers and more on wage positioning, institutional sponsorship and seniority.

The immediate effect will be fewer visas for Indian entry-level professionals. The longer-term consequence may be a reorientation of India’s global talent flows — away from the US, and towards alternative destinations or domestic opportunities.