US Ends H-1B Lottery, Introduces Wage-Based Selection From 2027

The United States has announced a major overhaul of its H-1B visa system, ending the long-running random lottery and replacing it with a wage-based, weighted selection model. The move is aimed at protecting American wages while prioritising highly skilled foreign talent.

What Has Changed in the H-1B Visa System?

The Department of Homeland Security (DHS) confirmed that the new selection process will give preference to employers offering higher salaries and roles that require advanced skills. This marks a clear shift away from cost-driven outsourcing.

• The random lottery system will be fully scrapped.
• H-1B visas will now be selected using a weighted system.
• Higher wage levels will receive better chances of approval.
• The annual cap remains 65,000 visas, plus 20,000 for US advanced degree holders.

When Will the New Rule Apply?

According to U.S. Citizenship and Immigration Services (USCIS), the rule will take effect on February 27, 2026 and will apply to the FY 2027 H-1B cap season.

USCIS said the earlier lottery system was frequently misused by employers seeking to hire foreign workers at lower wages, which diluted the program’s original intent.

$100,000 Additional Visa Fee Adds Pressure

The reform also aligns with a recent Presidential Proclamation that adds an extra $100,000 fee per H-1B visa. This significantly increases hiring costs for companies relying heavily on foreign workers.

Impact on Indian IT Companies

The decision is expected to have a major impact on India’s IT services industry. Large exporters such as Tata Consultancy Services, Infosys, and Wipro have long benefited from the H-1B program.

• Mid-level and entry-level hiring may reduce sharply.
• Companies may need to shift toward higher-end, specialised roles.
• The higher visa fee weakens traditional outsourcing cost advantages.

Big Picture

By prioritising pay and skill level over chance, the US is reshaping the H-1B program to favour quality over quantity. While this may strengthen America’s competitiveness, it forces Indian IT firms to rethink their global staffing and delivery models.