H-1B Visa Lottery Scrapped as US Formalises a Long-Running Shift in Hiring Strategy

The United States’ decision to scrap the traditional H-1B visa lottery and replace it with a wage-weighted selection system marks one of the most consequential changes to the programme in decades. While the move has sparked anxiety among Indian professionals, analysts say the impact on large Indian IT services companies is likely to be limited, as the reform largely formalises shifts already underway across the sector .

Under the new framework, H-1B visas will no longer be allocated through a purely random draw when applications exceed the annual cap. Instead, higher-paid and more specialised roles will enjoy a better probability of selection, aligning approvals more closely with compensation levels and skill intensity.

Why Big Indian IT Firms Are Largely Shielded From the Change

For India’s largest IT services companies, the revised H-1B mechanism is not expected to force a fundamental reset. Over the past few years, these firms have steadily reduced their reliance on deploying junior engineers onsite in the US, opting instead for senior, client-facing and niche talent while expanding offshore delivery from India.

Industry experts note that this transition began well before the latest policy announcement, particularly after the earlier introduction of a steep $100,000 fee on new H-1B petitions.

Prashant Yadav, Partner for Digital and Technology at leadership consultancy Amrop India, said large IT companies had already adjusted their workforce strategies.

“Absorbing a $100,000 fee for junior employees is commercially unviable, making senior talent the only realistic option,” Yadav told Moneycontrol.

As a result, analysts view the wage-weighted system as reinforcing existing staffing models rather than disrupting them.

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Why Indian Professionals Are Disproportionately Affected

The change matters most for Indian professionals because Indians account for nearly 70–75 percent of all H-1B visas issued annually. In 2024 alone, Indians made up 71 percent of approved H-1B visas, with China a distant second.

With the lottery now tilted in favour of higher wages, the new system is expected to prioritise:

Senior engineers and architects
Niche technology specialists
Experienced client-facing professionals

At the same time, analysts caution that the shift could reduce opportunities for:

Entry-level and mid-level IT roles
Academic and research positions
Healthcare and education roles, where prevailing wages are typically lower

This redistribution of approvals reflects the US government’s broader aim of favouring “premium labour” over volume hiring.

Wage-Weighted Model Discourages Application Flooding

One significant outcome of the reform is the reduced incentive to flood the H-1B system with large volumes of applications. Under the old lottery mechanism, companies often filed multiple petitions to improve odds.

The wage-weighted model instead encourages fewer, higher-quality filings aligned with high-value roles, analysts said. This change is expected to bring greater discipline to application strategies across the industry.

Offshore Delivery From India Set to Gain Further Momentum

As onsite hiring becomes more selective and expensive, offshore delivery from India is expected to accelerate further. Contracts with global clients typically allow flexible delivery models, enabling companies to rebalance work between onsite and offshore teams.

Akshat Vaid, Partner at Everest Group, earlier noted:

“In the near term, we can expect the movement of some work offshore, as most contracts typically have flexible delivery clauses.”

This shift is likely to boost utilisation at Indian delivery centres, even as governance and compliance costs rise marginally.

Margin Pressures Seen as Manageable Over Time

Market intelligence firm UnearthInsight expects Indian IT companies to increase local hiring in the US, which may cause short-term margin pressure. However, these impacts are expected to be neutralised over time through smarter workforce planning and automation.

Founder and CEO Gaurav Vasu had earlier said the reforms signal a clear preference for premium labour, with near-term margin effects that are likely to stabilise.

Importantly, the White House clarified that the $100,000 fee is a one-time charge applicable only to new petitions, not renewals or existing visa holders. This has significantly reduced fears of a sharp earnings shock, with earlier worst-case margin hit estimates of up to 7 percent now seen as unlikely.

Big Tech May Gain, But Is Also Looking Offshore

The wage-weighted system could tilt the balance in favour of US Big Tech firms, which typically pay much higher H-1B salaries than Indian IT services companies. Data from MyVisaJobs shows average H-1B salaries at companies like Google, Apple and Meta far exceed those at Indian IT firms.

Ironically, many of these global technology giants are simultaneously expanding their presence in India, investing in engineering hubs, AI partnerships, and large office campuses in Bengaluru and Hyderabad. This suggests that even Big Tech is planning around tighter US immigration rules.

End-User Firms Face Limited Disruption

For non-services and end-user companies, analysts expect only a moderate impact. These firms rely less on importing overseas talent and have alternatives such as the L-1 visa route, which allows internal transfers after meeting tenure requirements.

Yadav noted that even product firms may increasingly rely on offshore resources over time, despite having deeper financial capacity.

The Bottom Line: Evolution, Not a Shock

Across the industry, analysts agree the new H-1B regime is not a shock for large Indian IT companies. Instead, it accelerates trends already in motion:

Fewer junior roles onsite
Greater reliance on senior, specialised talent
Faster offshore delivery expansion
Continued localisation of hiring

In that sense, the scrapping of the H-1B lottery represents less a disruption — and more a formal recognition of how Indian IT has already adapted to a costlier and more restrictive visa environment.