Cleobase

Recent changes to the U.S. H-1B visa process are reshaping how businesses approach talent acquisition – and the impact is especially acute for small and medium-sized companies.

In 2026, the H-1B lottery system will no longer be purely random. Instead, it will be weighted in favor of higher-paying jobs, fundamentally altering the odds of securing work visas for foreign employees. This shift, aimed at protecting American wages and workers, may unintentionally spur a new trend: more companies offshoring operations and forming "nano" Global Capability Centers (GCCs) to access the talent they need.

A New Wage-Based H-1B Lottery

In late 2025, the U.S. Department of Homeland Security overhauled the H-1B visa selection process. The traditional random lottery was removed and replaced with a wage-weighted system that favors higher salaries.

Under the new rules, registrations are weighted by Department of Labor wage levels:

Level IV (highest wage): 4 entries
Level III: 3 entries
Level II: 2 entries
Level I (lowest wage): 1 entry

In practice, a junior developer earning ~$70k now has far lower odds than a senior hire offered $150k+.

The impact, however, is uneven. Analysis of the draft rule shows Level IV candidates could see selection odds rise by 107%, while Level I candidates could see odds fall by nearly 48%. This marks a sharp departure from the earlier system, where all applicants had roughly equal odds (~30%).

Compounding this shift, a new $100,000 H-1B application fee introduced in late 2025 adds another barrier for employers with limited budgets.

Why this hurts Startups & SMBs more than the big guys

In theory, the idea seems like a fair policy, but this shift hurts smaller companies far more than big ones.

Large companies have two advantages:

They can often price roles at higher wage bands (or absorb the cost of doing so).
Many already run Global Capability Centers (GCCs) — so if on-site hiring gets harder, they can shift work offshore without reinventing the wheel.

Small and mid-sized companies don't have that cushion.

They can't always justify Level III/IV compensation for every role.
They don't have an immigration team.
And they usually don't have an existing offshore engine to fall back on.

So when the "bring the person to the US" path gets narrower, the default Plan B becomes: move the work, not the worker.

Offshoring as an Alternative

The DHS itself acknowledged a "flip side" to the wage-weighted lottery: it is expected to result in more offshoring, with countries such as India benefiting as companies expand overseas teams.

Offshoring is no longer limited to large enterprises. Startups can begin small:

Hire one or two engineers remotely
Build small teams in regions like Latin America

Tools such as Employer of Record (EOR) services and remote hiring platforms now make international hiring far more accessible.

In effect, offshoring is becoming an alternative path to access international talent without navigating U.S. immigration constraints. This trend had already been growing, but the new lottery rules significantly intensify the push. Small companies that never considered having an overseas footprint are now exploring how to operate globally on a small scale.

The Emergence of "Nano" Global Capability Centers

One emerging concept in this context is the rise of "nano" Global Capability Centers.

Global Capability Centers (GCCs) traditionally refer to large offshore operations of multinational companies – for instance, a big bank's back-office center in Manila or a tech giant's R&D hub in Bengaluru. These are typically wholly owned, sizeable offices housing hundreds or thousands of employees, providing services or development support for the parent company.

Nano-GCCs are a scaled-down version of this idea, now gaining traction as a solution for smaller organizations. Instead of a 500-person center, a nano-GCC might be a focused team of 5, 50, or 100 people dedicated to the company's work.

This model allows companies to:

Full ownership and control, unlike traditional outsourcing
Retain control over culture, training, and intellectual property
Build long-term internal capabilities offshore
Achieve global expansion at a significantly lower cost and scale than traditional GCCs

How a Nano GCC Works in Practice

Advances in service models and operating structures have made nano-GCCs viable even for small companies. A typical setup includes the following components:

Local Partnership

The U.S. company partners with a local service provider in the target country. This enables local hiring and operations without immediately setting up a legal entity.

Administrative and Compliance Support

The local partner manages payroll, benefits, hiring, office setup, and labor compliance. This consolidates functions that earlier required multiple vendors into a single arrangement.

Operational Control

The U.S. company retains full day-to-day control over work, priorities, and quality. Employees are legally hosted by the partner but work exclusively for the client.

Scalability and Transition

The model allows companies to start small and scale gradually. Successful setups can later transition into a subsidiary or BOT structure.

Why It's a Win-Win Solution

When implemented correctly, the nano-GCC model creates value for all parties involved.

For small companies, it unlocks access to a much larger global talent pool without being constrained by U.S. visa outcomes. Teams can continue hiring the right people without delays, high visa costs, or lottery-driven uncertainty.

For the talent, it offers the opportunity to work with high-growth U.S. startups without relocating. Many professionals can build global careers while staying close to family and benefiting from lower living costs.

For partners and host countries, nano-GCCs drive job creation and meaningful knowledge transfer. This is why regions like India are seeing rapid growth in such centers, often supported by government incentives.

While managing remote teams requires strong communication and trust, most startups are already operating in remote-first environments. With the right partner and hiring approach, this model scales naturally.

Conclusion

At the end of the day, the new H-1B visa rules do pose a challenge, especially for small and medium-sized companies. But they are also catalyzing a new way of thinking. By building globally distributed mini-teams, startups can continue to grow and innovate without being at the mercy of a lottery.

And who knows? In a few years, having a nano-GCC might be as common for startups as having a cloud server or a remote freelancer is today – just part of the playbook for scaling up in a connected world.