US shift to pay-based H-1B visa selection system raises legal economic concerns Nasscom

New Delhi, Dec 24 (PTI) The US move to replace the H-1B visa lottery with a 'wage-weighted' selection mechanism is a significant departure from a long-standing neutral system, and raises important legal, economic, and operational concerns, Indian IT industry body Nasscom said on Wednesday.
    The comment assumes significance as the Trump administration is replacing the random lottery system that selected visa beneficiaries with a process that will prioritise the grant of visas to higher-skilled and higher-paid workers.
    The latest guidance comes as the US steps up scrutiny of legal and illegal immigration, alongside a sharper lens on the H-1B visa programme that companies rely on to hire foreign talent. Indian professionals account for a big chunk of H-1B visa holders.
    Nasscom argued that if a wage-weighted approach is indeed pursued, a phased implementation with sufficient lead time would be "essential". Delaying implementation until the FY28 lottery cycle would provide employers the necessary runway to adapt processes, ensure compliance, and maintain confidence in the stability of the US talent and investment environment.
    Expressing concern, Nasscom contended that by assigning multiple selection entries based on Occupational and Employment Wage Statistics levels, the framework risks moving beyond the statutory focus on "speciality occupation" and toward wage ranking, potentially introducing regional and occupational distortions.
    Wage levels vary significantly by geography and role, and a weighted model could inadvertently disadvantage small and mid-sized enterprises, startups, research institutions, and university-linked employers that operate with moderate but market-appropriate wage structures.
    "Though the intent behind the proposed changes to promote high-skill employment, curb misuse, and protect US wages is well understood, a transparent, trusted visa framework is essential to maintaining the strength of the US technology ecosystem," Nasscom said.
    As such, the final rule is effective from February 27, 2026, and will be in place for the FY 2027 H-1B cap registration season.
    It highlighted that the changes represent a significant departure from the long-standing, neutral lottery system and raise important legal, economic, and operational concerns.
    While H-1B professionals constitute a small share of the overall US workforce supported by Nasscom member companies, they play a major role in driving innovation, productivity, and job creation across the digital economy.
    H-1B petitions at Level I and Level II wage bands frequently represent entry-level roles for graduates of US universities in science, engineering, and computing disciplines. Such positions form a vital part of the STEM talent pipeline, enabling early-career professionals to gain industry experience and progress into mid- and senior-level innovation roles over time, according to the apex association.
    Restricting opportunities at the entry level, under a wage-weighted system, could weaken the future talent base and discourage international students from pursuing advanced education in the US, something that would work against the country's goals of strengthening competitiveness, driving innovation, and supporting higher education.
    "Further, a sudden shift to a wage-weighted model would introduce uncertainty, increase compliance complexity, and disrupt long-established workforce planning, particularly for smaller and mid-sized firms that align recruitment with academic calendars, client delivery schedules, and product release cycles," it said.
    Outlining the contribution of Indian companies to the American economy, Nasscom said its member companies collectively support more than 1.6 million skilled jobs across the US, contributing USD 198 billion to the US GDP, an impact larger than that of over 20 state economies.
    "With over 2,64,500 employees directly in the US and a presence in more than 25 major American communities, Nasscom companies help strengthen both established and emerging technology hubs. Notably, more than two-thirds of these jobs are located outside Silicon Valley and New York, fostering inclusive growth in regions such as Texas, North Carolina, Ohio, and Illinois," Nasscom asserted.
    As per Nasscom, any structural reform must preserve predictability, equity, and alignment with statutory intent.
    "The joint US congressional letter issued on October 30, 2025, addressed to the President, also highlights that Indian nationals, who make up the largest share of H-1B recipients, are central to US leadership in information technology and artificial intelligence," Nasscom said, adding that America must continue attracting the world's best talent to maintain innovation ecosystem, strengthen the defence industrial base, and preserve long-term competitive edge.
    For India, the country of origin for 71 per cent of H-1B holders last year, attracting this talent also reinforces the strategic partnership with a key democratic partner in the Indo-Pacific, Nasscom said.
    "A balanced, consultative approach will be critical to ensuring that reforms strengthen rather than inadvertently weaken the innovation advantage and global competitiveness of the United States," Nasscom said and pointed out that the H-1B programme is not simply about addressing labour needs, but about securing US leadership in the industries that will define global power in the 21st century.
    It is pertinent to mention here that the latest US move is bound to compound worries for the USD 280 billion Indian IT industry that is reeling under a record USD 1,00,000 visa fee, and fears of potential 25 per cent HIRE outsourcing tax - all of which have seen critics and industry leaders engage in debates over whether foreign-talent pipelines hurt wages or fill skill gaps.

(This story has not been edited by THE WEEK and is auto-generated from PTI)