Indian IT stocks are likely to be in focus today after the US Department of Homeland Security (DHS) announced a significant change to the H-1B visa selection process, replacing the long-standing random lottery with a weighted system that favours higher-skilled and higher-paid applicants.
The new rules, announced by US Citizenship and Immigration Services (USCIS), will take effect on February 27, 2026 and apply from the FY 2027 H-1B cap season.
Under the revised framework, each applicant will receive multiple entries into the selection pool depending on the wage level of the job they are being sponsored for:
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Wage Level IV: Highest weight, giving applicants significantly better odds
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Wage Level III: Moderate advantage
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Wage Level II: Small advantage
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Wage Level I: No additional weight, lowest odds
USCIS spokesperson Matthew Tragesser said the earlier random lottery system was “abused for lower-wage imports,” adding that the new weighted mechanism “incentivizes higher-paid and higher-skilled petitions,” aligning with President Trump’s pledge to reform the programme. A separate proposed policy—including an additional $100,000 per visa fee as an eligibility condition—is also under consideration.
Impact on Indian IT companies
Analysts expect the policy shift to have mixed implications for the Indian IT sector:
1. Higher costs for H-1B-driven roles
Large Indian IT services companies such as TCS, Infosys, Wipro, HCLTech and Tech Mahindra may see higher wage requirements for onsite employees, increasing overall project delivery costs.
2. Advantage for higher-skilled talent
Indian firms that file petitions for senior engineers, architects and specialised AI/Cloud roles—typically paid at higher wage levels—may benefit from better visa selection odds.
3. Pressure on entry-level deployments
The new system reduces the chances for Wage Level I applicants, impacting freshers and junior engineers who are often deployed onsite to support large transformation projects.
4. Shift towards local hiring in the US
IT companies may accelerate their ongoing strategy of hiring more locals in the US to reduce dependency on the H-1B pool, especially for junior roles.
5. Limited near-term earnings impact
Since the reform applies only from FY27 cap filings, brokerages expect no immediate financial hit, but increased compliance and wage inflation pressures over time.
