End of the Consultancy Model: Weighted H-1B Picks Reshape Low-Wage Staffing

On December 23, 2025, the Department of Homeland Security (DHS) announced a final rule that changes how the 🇺🇸 H-1B cap lottery works, and it hits the same part of the market hardest: high-volume, low-wage staffing and outsourcing firms that file large numbers of registrations for entry-level and mid-level roles. The rule is set for Federal Register publication on December 29, 2025, and it replaces a pure random draw with weighted selection that favors higher wage levels.

In plain terms, one registration no longer has the same chance as another. A job offered at a higher wage level gets more “entries” in the selection pool, so it has better odds of being picked. DHS frames the change as a way to favor “higher-paid, higher-skilled” positions and to protect U.S. workers by reducing incentives to use lower-paid H-1B hires for routine roles.

For workers, this means the offered wage level may matter as much as the job title. For employers, compensation strategy and job leveling now directly affect selection odds. For many staffing agencies built on volume filings for Level I and Level II roles placed at third-party client sites, the change is not a small tweak. It pushes them toward fewer filings, higher wages, and more intensive compliance work — or toward moving work offshore or remote where H-1B isn’t needed.

DHS says the rule applies to FY2027 registrations (early 2026), which gives employers a short runway to change their playbook before the next cycle.

Weighted selection basics

Under the DHS final rule, all registrations still go into one pool, but weighted selection multiplies entries based on the wage level tied to the job.

• Level IV registrations get 4 entries
• Level III get 3 entries
• Level II get 2 entries
• Level I get 1 entry

DHS attached estimated selection probabilities to illustrate the effect on different wage levels:

Key implications:

• Level III/IV are the clear winners under weighted selection.
• Level II sees only a slight increase from random.
• Level I suffers a sharp decline (DHS estimates a ~42–48% drop vs. the prior random lottery).

If two employers file the same number of registrations, but one pays at Level III/IV and the other mostly files Level I/II, the first employer is far more likely to see approvals. DHS is moving the cap system from “more tickets equals more wins” toward “higher wage level equals better odds.” For employers that compete on labor cost, this affects core pricing and delivery models.

If the wage level tied to a registration changes, the registration’s odds change significantly — not just the petition strength later on.

How wage levels get set

The multiplier depends on how wage levels are assigned. The rule ties wage levels to the Department of Labor’s Occupational Employment and Wage Statistics (OEWS) system, which uses:

• SOC codes
• Job duties
• Work location
• The offered salary

Those elements map a job to a wage level. That means employers can’t treat “Level I” or “Level II” as simple labels — the job description, actual duties at the worksite, and the pay offered all feed into the wage level that determines weighted selection odds.

Staffing agencies face particular pressure because many roles are client-site placements, and the “real job” may be described by both the agency and the end client. The source material advises agencies to:

• Audit roles
• Stress-test descriptions
• Align everything with the Labor Condition Application (LCA)

This alignment aims to avoid Requests for Evidence (RFEs) or denials. It’s substantive, not just paperwork: a routine entry-level job will likely stay at Level I (1 entry), while a genuinely senior role paid at Level III/IV gets more entries. DHS and enforcement bodies may scrutinize whether the claimed wage level matches the duties and placement reality, creating a double bind for employers:

1. Raise wage levels and tighten job descriptions to justify the level.
2. Prepare for closer review of whether the role truly fits that wage level.

Pressure on staffing agencies

The most direct shock hits the high-volume, low-wage consultancy and staffing model that relies on filing thousands of registrations — mostly for Level I and Level II roles common in IT outsourcing and staff augmentation.

The source material calls the challenge “existential” and provides several scale indicators:

• FY2024 saw ~17,069 small entities in the lottery
• Level I filers now risk ~$85,006 lost labor per unselected worker
• DHS projects ~10,009 fewer Level I approvals

Why this matters:

• The consultancy model depends on predictable throughput: recruit candidates, file many registrations, and staff client projects with those selected.
• Lower selection odds produce fewer workers and less revenue, while increasing idle recruiting and bench cost.
• The source notes a historical reliance where prolific H-1B users (e.g., IT outsourcing firms) saved ~36% on entry-level roles compared with U.S. workers, including situations where outsourcing followed domestic layoffs.

DHS’s aim is to remove incentives for that pattern by making low-wage, routine roles less likely to win the cap.

According to analysis by VisaVerge.com, this is a clear policy choice to use the lottery — not just later petition review — to shape which kinds of H-1B jobs enter the system.

Compliance and site checks

The rule change comes alongside compliance escalation, including:

• Reinforced on-site inspections for third-party placements
• Stricter degree checks
• Heavier documentation requirements

Staffing agencies placing H-1B workers at client locations should expect scrutiny in areas such as:

• Who supervises the worker
• What the worker’s day-to-day duties are
• Whether duties match the petition and the LCA

When agencies push roles upward to secure better selection odds, that can invite closer review of whether a job is truly senior or complex enough for Level III/IV. The source stresses the need for internal alignment:

• Job description
• SOC code choice
• Wage level
• Offered salary
• Worksite location
• Client letters

All must tell the same story. Employers also need to be realistic about documentation limits. If the client controls tasks and supervision, classic third-party placement issues can arise and inspections will probe those facts.

For workers, compliance pressure may translate into delays and uncertainty, especially if an RFE asks for:

• Proof of specialty occupation duties
• Proof of employer-employee relationship
• Proof that the end-client role matches the filed petition

DHS’s promise of “higher-skilled” selection will only hold if enforcement can police mislabeling; selection policy and enforcement are moving together.

Higher costs change the math

The source material points to a new $100,000 one-time fee for most petitions with beneficiaries outside the U.S., up from roughly ~$3,000 in comparable contexts. That fee dramatically changes the economics of volume filing.

Practical effects:

• The fee makes “spray and pray” filing uneconomic for many firms.
• Staffing agencies with small per-worker margins multiplied across many workers may see profits wiped out.
• Employers may hesitate to register candidates overseas if a later petition stage triggers a six-figure fee.
• Smaller employers may be trapped: they can’t easily raise wages to Level III/IV nor absorb steep fees across many cases.

Combined with lower selection for Level I/II roles, the result is:

• Fewer H-1B starts
• Fewer project staff in the U.S.
• Greater pressure to hire in other ways

For official background on the H-1B program, DHS and USCIS keep the main public guidance here: USCIS H-1B Specialty Occupations.

New hiring and delivery paths

The source material describes strategic shifts staffing firms and clients are considering:

• Prioritize Level III/IV roles and forecast selection odds using SOC and wage modeling before filing.
  • Focus on senior engineers, architects, leads, or roles with clearly complex duties.
  • Reduce entry-level intake to improve hit rates.
• Increase offshore recruitment, which the material says can:
  • Save ~60% costs
  • Deliver ~50% faster hiring
• Use Employer of Record (EOR) services across 150+ countries so companies can hire workers abroad without visas.
• Expand nearshoring/remote work to avoid cap exposure.

Consequences for workers and clients:

• These moves do not help every worker equally. Recent graduates hoping to stay in the U.S. via H-1B may find jobs exist but are no longer located in the United States.
• Buyers (clients) may demand higher-wage talent. Vendors with stronger compliance programs (e.g., firms like QX Global) may win more business.
• In practice, a smaller set of vendors that can prove wage level, duties, and placement controls cleanly may capture more contracts.

Timeline and early-career concerns

DHS ties the weighted selection rule to the FY2027 registration season (early 2026), leaving employers only months to:

• Review job leveling
• Revisit pay bands
• Tighten client documentation practices

Preparation should start now with role audits and compensation alignment.

Notable debates and risks:

• The Association of American Universities (AAU) criticizes the rule for “conflating wages with skill,” warning it could harm retention of early-career, U.S.-trained talent — especially recent graduates in entry research or IT roles paid at Level I/II.
• The source flags “small business fallout,” noting that smaller agencies and startups often cannot match big-tech salaries, so hiring pipelines shrink even though only ~0.5% of the workforce may be affected directly.
• Employers planning to file H-1B petitions should be ready for closer attention to the petition package. The core filing vehicle remains Form I-129: Form I-129, Petition for a Nonimmigrant Worker.

Critical deadlines and action items:
– FY2027 registration season = early 2026 (start preparations immediately)
– Federal Register publication = December 29, 2025
– Expect stronger enforcement and documentation requests going forward

If you need, I can:
– Summarize immediate action steps for employers or staffing agencies.
– Draft a checklist for role audits, LCA alignment, and documentation to withstand RFEs and site inspections.
– Model selection odds for a sample staffing firm based on its historical Level I–IV filing mix.