US H-1B visa overhaul: What will $100,000 fee, wage-based lottery mean for Indian IT firms - Explained

The U.S. Department of Homeland Security (DHS) recently unveiled a significant overhaul to the H-1B visa system that is set to reshape how Indian IT firms navigate the competitive US labour market.

The changes, effective from the FY 2027 cap season, include the introduction of a $100,000 visa fee for certain applications and a shift from the traditional random lottery to a wage-based, weighted lottery system.

These developments mark one of the most consequential adjustments to the H-1B visa program in decades, with profound implications for India’s technology sector, which is the largest beneficiary of the visa.

What are the key changes?

Under the new rules, the DHS aims to prioritise higher-skilled, higher-paid foreign workers by modifying the selection process for H-1B visas. The random lottery system will now factor in wage levels, with higher-paying positions receiving a greater chance of selection.

The department’s draft document explains the intent of this rule, stating, "The purpose of this rule is to allow DHS to implement the numerical cap in a way that incentivises employers to offer higher wages, or to petition for positions requiring higher skills and higher-skilled aliens, that are commensurate with higher wage levels."

In simple terms, applicants for higher-paid positions, such as those in advanced engineering, cybersecurity, and AI, will have a higher likelihood of being selected. The new system also incentivises employers to offer more competitive wages for specialised roles, aligning with the broader aim to reduce abuses of the program, particularly where low-wage workers fill routine, lower-skilled roles.

The wage-weighted lottery will give "registration for wage level IV (highest) applicants" four entries in the pool, while "wage level I (lowest)" will only be entered once into the selection process. This change aims to make the H-1B system more merit-based and in line with congressional intent.

What does this mean for Indian IT firms?

Indian IT firms, which rely heavily on the H-1B visa program to deploy skilled talent for US-based clients, now face a more challenging environment. The $100,000 fee, which applies to certain applications, significantly increases the cost of securing visas for large numbers of workers.

Historically, Indian firms have used H-1B visas for a broad range of positions, often involving less specialised roles that could be filled by lower-wage employees. The new rules, however, push companies to reconsider their staffing strategies.

Speaking to Business Today, Saurabh Arora, Founder & CEO of University Living, shared his thoughts on the impact of these changes: "The U.S. Department of Homeland Security’s move to introduce a $100,000 fee on certain H-1B visa applications signals a clear shift toward reducing volume-led usage of the program and prioritising higher-value, specialised roles."

For Indian IT firms, which have relied on deploying large volumes of talent onsite, this shift forces a move towards more targeted hiring. Firms will now need to be highly selective about which roles they send to the US and will likely prioritise senior, niche, and client-critical positions that justify both the higher fees and the elevated wage thresholds.

"Rather than broad-based deployments, companies will need to be far more selective, reserving H-1B filings for senior, niche, and client-critical positions where the business case can justify both the fee and higher wage thresholds," said Arora. 

Ankit Mehra, CEO & Founder of GyanDhan, emphasised that the changes will particularly impact large IT services firms like Infosys and TCS: "This reform will negatively impact large IT services firms like Infosys and TCS, though the real impact may be muted since many have already built offshore and near-shore contingencies." For these firms, the shift is structurally challenging, especially for entry-level and lower-paid roles. Mehra added, "For large IT services firms like Infosys and TCS, the shift is structurally challenging. While these companies can somewhat mitigate the impact through their established offshore and near-shore operations, entry-level and lower-paid roles within these firms are likely to be affected the most."

He also noted that product companies and firms hiring for niche, high-skill roles stand to benefit from these reforms. "In contrast, product companies and firms hiring for niche, high-skill roles stand to benefit. Global tech leaders such as Apple, Meta, NVIDIA, and other deep-tech companies, which already hire and pay at the higher end of the spectrum, are likely to gain."

What does this mean for US tech firms?

US tech companies, however, are unlikely to abandon Indian talent altogether. The demand for skilled professionals remains high, especially in specialised areas.

But with the new system in place, U.S. firms will likely become more targeted in their approach to hiring foreign workers. As Arora noted, "U.S. tech companies are unlikely to step away from Indian talent, but the nature of hiring will become more targeted. With higher costs and a wage-based allocation system, H-1B visas will increasingly be used for roles that are genuinely difficult to fill locally and require specialised expertise."

Firms will also look to expand domestic hiring, invest in upskilling local teams, and rely more on nearshore and offshore models for roles that do not require a constant onsite presence. 

The future outlook

Indian IT firms will likely need to adopt alternative strategies to maintain their competitive edge. The $100,000 fee and wage-based selection system could accelerate the transition towards smaller, more senior onsite teams, with a greater reliance on offshore delivery for less specialised roles. 

The new system also poses challenges for early-career and mid-level professionals, who may find it harder to secure an H-1B visa under the weighted lottery system. The new system favours market-driven skills and high compensation, meaning generalist roles or lower-compensation profiles will face reduced chances of selection.