If you remove the option for sponsorship then these workers will still be working their jobs because they're talented and in demand, they'll just be doing it from their home country instead for lower compensation.
I think this move makes it likely companies will hire more expensive domestic workers.
Many H-1B workers request sponsorship from employers despite having the ability to work from local offices because they have in-demand skills that give the leverage to ask for it knowing that it will result in better opportunities.
The question is, if tech companies can't have their Bay Area offices filled with the caliber of people they want (who will accept being forever-renters or super-commuters), will they relent on US remote / small sites, or will they instead try to shift their trillion-dollar Bay Area office cultures to their Bangalore sites? My money's on the latter.