Trump’s proposed H-1B wage-based selection rule could squeeze Indian IT’s early-career hires

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The Trump administration’s proposed plan to replace the H-1B lottery with a wage-based selection system — recently cleared by a key White House office—could sharply curtail approvals for Indian IT services companies.

By prioritising top-paid, niche-skilled applicants in the highest wage bracket (Level 4), the change would side-line most early-career tech workers in lower wage levels, forcing firms to lean more on local hiring, automation, and remote delivery.

The proposed changes are to be released for public review. If agreed, these could impact an estimated 20,000-25,000 professionals at Level 1 and 2 salary ranges that mostly includes early career employees, Pareekh Jain, CEO of Pareekh Consulting and EIIRTrend, said. To apply for H-1B visas, the applicants must earn at least $60,000 annually.

H-1B visas are non-immigrant visas that allow US companies to employ foreign workers in speciality occupations such as science, technology, engineering, mathematics (STEM), and IT. The H-1B visa program has an annual cap of 85,000 visas, including 65,000 for the regular cap and an additional 20,000 for those with an American master's degree or higher.

A re-set, not a tweak

Poorvi Chothani, a Florida-based immigration lawyer and managing partner of LawQuest, said applicants at Level 4 of the US Department of Labour (DOL’s) wage category, or those who are highly skilled or qualified or those with niche skills are likely to be prioritised.

“For example, data analysts in the IT industry, at a level 4 wage, demand a high salary, going up to $160,000 per year in certain locations,” she told Moneycontrol.

She said the selection criterion would have a drastic impact on applications from IT services firms, which predominantly require junior or mid-level professionals, usually at Level 1 and 2 of the DOL wages. “However, please note that this is speculation, as the proposed changes have not yet been published for public comment and will not take effect for several months,” Chothani said.

“This isn’t just a policy tweak, it’s a reset. The H-1B will shift from a volume-staffing tool to a surgical strike for niche, high-value talent. Over time, this will push more routine delivery offshore and make the US onsite presence smaller but far more specialised,” said Phil Fersht, CEO, HFS Research, a global business research consultancy.

Fersht said the message to the Indian techies is clear. They need to upskill fast into high-value, in-demand domains or risk being shut out. The winners would be those who can straddle global delivery with deep local domain expertise, exactly the sort of hybrid talent US clients would now pay a premium for.

“Indian IT firms will feel a double squeeze. The lower-cost, early-career techies who have historically dominated H-1B inflows will find it harder to qualify, while the top-tier AI and digital specialists who do qualify will command premium salaries. That means fewer visas overall for the traditional offshore-onsite delivery model, forcing firms to ramp up US local hiring and accelerate automation and remote delivery,” Fersht said.

IT firms’ H-1B dependency

The top five Indian IT services firms — Tata Consultancy Services (TCS), Infosys, HCLTech, Wipro and Tech Mahindra — have maintained they have only about 20 percent to less than 50 percent dependency on H-1B visas, as they prefer to hire more locals onsite in the US.

North America accounts for more than 60 percent of the Indian IT industry’s revenue.

As of 2024, Indian-origin companies such as Infosys and TCS secured nearly 20 percent of the total approved visas, according to data sourced from staffing firm TeamLease Digital.

Jain said the changes may not have a significant impact, as the Indian IT service providers "are restructuring in the age of AI", where many junior roles may no longer be required, so, the overall impact may not be severe. Indian IT service providers will increasingly rely on subcontractors for short-term needs instead of H-1B hires, which could affect margins.

Also read: H-1B Visa Shake-Up: Trouble for Indian professionals? White House shift from lottery to wage-based picks may shut out entry-level executives

“IT firms were already reorganising their structures around pyramid, skills, and geography. The H-1B changes add another layer of complexity. Overall, the current environment is not conducive to large-scale H-1B deployments due to the US situation, macro conditions and shifting skill requirements,” Jain said.

“Companies are likely to take a reactive approach, avoid aggressive H-1B filings, prefer subcontractors for short-term roles, and use L-1 visas for mid-senior positions—reducing their reliance on H-1Bs.”