I agree that clients prefer/want their consultants onsite and many of the companies won't compromise on this. But for the ones where cost is the primary factor, they would just keep the critical people onsite. (Onsite coordinator, architect guy etc.,). Regarding timezone, consulting firms already run several projects matching US time.
The whole thing is so complex and has so many facets that there is no straight forward solution to it.
Junior engineers filling up the quota is actually preventing senior engineers from getting through. There is always demand for high quality senior engineers, and companies like more choice.
You are partly right. Protectionism may work for jobs which need physical presence or security clearance. (lawyers, doctors, teachers, government/defense/aviation employees). But I am not so sure it will work for Tech jobs, which can be moved anywhere in the world. IaaS platforms make it even trivial.
No matter how you frame the issue, call it an abuse, or try to solve it, I don't think anything will change other than some minor adjustments. Jobs are not going to magically appear or wages rise.
India/China has a huge supply of engineers across the board (good, bad, senior, junior etc.,). And US companies always want to maximize their profits. So increasing the bar on H-1B visas will increase the quality of H-1B's making their way to US.(very competent, hard working, willing to work for lower wages in the initial years).
This is a huge benefit for technology companies who can directly recruit from these countries for US offices, which they were not doing before due to lottery uncertainties, and instead had to rely on L-1 route. (recruit for local office, then transfer)
As for the other US jobs that were being filled by low skilled H-1B's, they will simply move offshore/nearshore/remote or replaced by AI in few years. This is a big win for consulting firms as their offshore profitability per employee is 3 times higher than onsite. Given a choice, they would want all their employees offshore, and the only reason they had to bring in some % of H-1B's was on the US client companies request, which they may do away with now.
Bottomline: Protectionism did not work for manufacturing, and will not work for Tech either.
You are right. For the 85K visas, there were ~240K applications. If 30% of them were for senior engineers, then with these new stricter directives all 85K visas go to them, thereby increasing the supply of senior engineers.
Otherwise there would have been 30K senior engineers and 55K junior engineers.