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Under the revised approach, visas will no longer be granted purely through random selection, the US Department of Homeland Security said
H-1B visa
IT Stocks Fall Today: Shares of information technology firms edged lower on December 24 after the Donald Trump administration announced plans to replace the long-standing lottery-based system for allocating H-1B work visas with a new framework that prioritises higher-paid and more skilled foreign workers.
Under the revised approach, visas will no longer be granted purely through random selection, the US Department of Homeland Security said. Instead, applications will be weighted to improve the chances of approval for foreign professionals offered higher wages and roles requiring advanced skills.
According to a press release announcing the rule, the change is “in line with other key changes the administration has made,” including a Presidential Proclamation that requires employers to pay an additional $100,000 per visa as a condition of eligibility.
At 10:15 am on December 24, the Nifty IT index was trading 0.3 percent lower at 39,050. Stocks such as Coforge, Tech Mahindra and Wipro led the losses, declining between 0.7 percent and 1 percent. Persistent Systems and Infosys were also down about 0.5 percent each.
This marked the second straight session of losses for IT shares, following a four-session rally earlier.
Historically, H-1B visas have been awarded through a lottery system. In the latest cycle, Amazon emerged as the largest recipient with more than 10,000 approvals, followed by Tata Consultancy Services, Microsoft, Apple and Google. California hosts the highest concentration of H-1B workers.
The new system will “implement a weighted selection process that will increase the probability that H-1B visas are allocated to higher-skilled and higher-paid” foreign workers, the release said. The rule will take effect from February 27, 2026, and will apply to the upcoming H-1B cap registration season.
Supporters of the programme argue that H-1B visas are crucial for hiring healthcare workers and educators, driving innovation and economic growth, and filling specialised roles. Critics, however, say the visas are often used for entry-level positions and can enable wage suppression by classifying roles at lower skill levels despite higher experience.
The annual cap on new visas remains at 65,000, with an additional 20,000 reserved for applicants holding a master’s degree or higher.
What brokerages say
Brokerages have assessed the potential impact of the new H-1B framework and largely expect the effect on Indian IT companies to be limited.
CLSA noted that the higher costs apply only to new applications and not renewals or the existing H-1B workforce, which should restrict the downside. In a worst-case scenario, the brokerage estimates up to a 6 percent hit to FY27 earnings for Indian IT firms under its coverage if companies bear the full cost of fresh applications.
Motilal Oswal Financial Services said the first meaningful impact is likely to be felt in FY27, as H-1B lotteries and filings typically take place between the fourth and first quarters. It added that Indian IT firms have reduced their dependence on H-1B visas over the past decade and that the order could face legal challenges in US courts.
Nomura estimated the worst-case impact at around 10–100 basis points on margins across its coverage universe. It added that clients and IT service providers are likely to increase offshoring and automation to offset higher visa costs, while growth in Global Capability Centres (GCCs) in India could accelerate.
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December 24, 2025, 12:26 IST
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