Cognizant Expects Immigration Bill Debate to Extend Into 2014

Cognizant Technology Solutions Corp. (CTSH), the largest recipient of visas for bringing H-1B temporary workers to the U.S., expects a debate on immigration reform to last until 2014, making it difficult to predict how the legislation will affect the company.

“You can’t model it,” President Gordon Coburn said in an interview last week. “The process for changes to the bill we expect goes late this year into next year.”

The proposed immigration bill, the first major overhaul of the laws in more than two decades, includes fees and rules that make it harder for outsourcing companies like Cognizant to depend on temporary visas to bring workers into the country. Cognizant uses the visas to add thousands of U.S. employees each year, often deploying them to customers’ technology projects.

The bill increases the cost of applying for temporary work visas, especially if more than half of a company’s U.S. employees use them. It also says no company with more than 15 percent of its U.S. staff on work visas can put those employees at client sites -- something specifically targeted at outsourcers.

At least two analysts have predicted lower profit margins for Cognizant and other outsourcing companies such as Infosys Ltd. because of the restrictions. Still, it’s too early to gauge the impact, Coburn said.

Customer Input?

Cognizant’s customers may step forward to fight the provisions, he said. The Teaneck, New Jersey-based company works with large institutions in the banking and insurance industries, potentially giving it more sway during negotiations.

“Customers are going to weigh in, and they should,” he said. “Ultimately what’s going to be important is when customers go to Congress and say, ‘If you do this, it’s going to be bad for banks. If you do this, it’s going to be bad for insurers.’”

The H-1B visas were created in 1990 to let technology companies bring in skilled employees from oversees, ostensibly to make up for a shortage of local talent.

Unlike companies like Google Inc. and Facebook Inc., which rely on the program to recruit a relatively small number of highly skilled people, outsourcers use H-1B visas in the hundreds or thousands a year. That’s drawn scrutiny from lawmakers concerned that the program is just a way to get cheaper labor.

Coburn said the company uses the program to find the skills necessary for outsourcing tasks, not to replace U.S. workers.

“We pay our people prevailing wage,” he said. “They’re not cheap once I include relocation costs and visa costs.”

To contact the reporter on this story: Sarah Frier in New York at sfrier1@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net

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