The influential Indian IT industry body, Nasscom, has raised significant red flags over the United States' decision to replace the long-standing H-1B visa lottery with a new 'wage-weighted' selection mechanism. In a statement issued on Wednesday, December 25, 2024, Nasscom described the move as a major departure from a neutral system, warning it introduces serious legal, economic, and operational challenges for both countries.
From Lottery to Wage Ranking: A Fundamental Shift
The core of the change, driven by the Trump administration, is the replacement of a random computerised lottery with a process that prioritises visas for higher-skilled and higher-paid workers. This shift aligns with broader US efforts to intensify scrutiny of both legal and illegal immigration. The final rule is set to be effective from February 27, 2026, and will govern the FY 2027 H-1B cap registration season.
Nasscom, while acknowledging the intent to promote high-skill employment and protect US wages, argues the new framework risks distorting the original statutory purpose. "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," the association contended. This could create regional and occupational imbalances, as wage levels vary dramatically across different US geographies and roles.
Threat to SMEs, Startups, and the US Talent Pipeline
A primary concern highlighted by Nasscom is the potential disadvantage to smaller players in the US economy. The industry body warned that a wage-weighted model could inadvertently hurt small and mid-sized enterprises (SMEs), startups, research institutions, and universities that operate with moderate, market-appropriate salary structures.
Furthermore, Nasscom emphasised that H-1B petitions at Level I and Level II wage bands often represent crucial entry-level roles for graduates from US universities in STEM fields. These positions are a vital part of the talent pipeline, allowing early-career professionals to gain industry experience. "Restricting opportunities at the entry level... could weaken the future talent base and discourage international students from pursuing advanced education in the US," Nasscom stated, adding this would work against America's own goals of boosting competitiveness and innovation.
The body stressed that a sudden implementation would create uncertainty, increase compliance complexity, and disrupt workforce planning, especially for firms that align hiring with academic calendars.
Strategic Partnership and Economic Contributions at Stake
Nasscom outlined the monumental contribution of its member companies to the US economy to contextualise its concerns. Indian IT firms collectively support over 1.6 million skilled jobs in the US and contribute a staggering $198 billion to the US GDP—an economic impact larger than that of more than 20 individual US states. Notably, more than two-thirds of these jobs are located outside major hubs like Silicon Valley and New York, fostering growth in states like Texas, North Carolina, Ohio, and Illinois.
The stakes are equally high for India, which was the country of origin for a dominant 71% of all H-1B visa holders last year. Nasscom pointed out that facilitating this talent flow reinforces the strategic partnership between the two key democratic partners in the Indo-Pacific region. The association also cited a joint US congressional letter from October 30, 2025, which noted that Indian nationals, as the largest share of H-1B recipients, are central to US leadership in critical fields like information technology and artificial intelligence.
"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," Nasscom asserted. It called for a phased implementation with sufficient lead time, suggesting delaying the new system until the FY28 lottery cycle to give employers time to adapt.
The latest US move adds to the challenges for the $280 billion Indian IT industry, which is already grappling with issues like high visa fees and potential new taxes. Nasscom's appeal is clear: any reform must preserve predictability, equity, and alignment with the law's original intent to ensure the US maintains its innovation advantage and global competitiveness.
