Cognizant Technology Solutions Class A Earnings Call Nuggets: Senate Amendments and Immigration Reform

Cognizant Technology Solutions Corporation Class A (NASDAQ:CTSH) recently reported its first quarter earnings and discussed the following topics in its earnings conference call.

Senate Amendments

Darrin Peller – Barclays: We noticed this morning a number of amendments that have been introduced, including some by Senator Hatch trying to really address outplacement. On that topic you also mentioned your trends on U.S. workforce and other green card capabilities. I think what we’re looking to hear is really what your clients are thinking about this topic. I mean, have you seen any feedback from some of your customers in the sense of potentially looking at lobby Congress on the efforts? Could you really discuss how low unemployment is in technology and the potential locations of this provision?

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Gordon Coburn – President: Sure Darrin. The clients have made it very clear to us. They are happy to weigh in. The discussion is, when should they weigh way in? It’s very important to remember that this is going to be a long process. The Senate is going to make some amendments though, but their bill will come out and probably get passed next month and then the House is going to discuss it over a matter of many, many months. And obviously, the bill that comes out of the House, if any, will look dramatically different. So clients and the lobbyist for our clients, many of them think the right time to weigh in is much later in the process, not at this point. It’s interesting. Senator Rubio, who is one of the Gang of Eight this past weekend, said publicly on one of the talk shows that the Senate bill as written and I quote, cannot pass the U.S. House of Representatives. That’s the person who wrote the bill said that. So, there’s going to be a lot of discussion, not just in amendments to the Senate bill that will go for vote next month, but much more importantly with what happens with that House bill which will probably look fundamentally and dramatically different. So the answer is, clearly our clients are saying we will weigh in, but they are thinking very strategically about when is the appropriate time to weigh in.

Immigration Reform

Peter Christiansen – UBS: This is Peter Christiansen for Steve Milunovich. Thanks for taking my question. I just want to dig a little bit more into the immigration reform issue and talk about what you are speaking, what you’re talking to your strategic accounts and what is your message to them? And also, in planning for contingencies, would in terms of the outplacement conditions, would the use of local subcontractors or even BATS trading, would those methods be feasible and how would it affect your business model?

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Gordon Coburn – President: It’s interesting. It’s not so much what are we messaging to our clients, it’s what are our clients messaging to us. They are reaffirming that we are essential to them running their businesses and being competitive in the environment. So, our clients are messaging to us, Cognizant, we need you and we’re going to help make sure you’re around, so you can continue to serve us both, so we can be competitive in the global marketplace and so we can continue to innovate. Obviously, we’re messaging a similar thing to clients and both clients and us understand once again that he bill as written will not look like the bill that is ultimately passed by Congress, if anything is passed by Congress, because the bill as written would do dramatic harm to the U.S. economy. When we think about contingencies, remember there are so many permutations of what this bill would look like. If you look at the bill right now, it contradicts itself in places so we obviously have various contingencies that we can leverage. There’s no one silver bullet by any stretch of the imagination. But the fundamental issue that Congress is going to have to deal with this, there are not enough U.S. tech workers, unemployment, according to the government statistics, for tech work is less than 4%. Based on what I’ve learned at business school, that is full employment. So it’s not as simple as you can say, okay, Indian firms and U.S. firms that leverage global workforce can no longer do this work. The premise, there are not enough replacements the U.S. economy will shut down. So I think when you think about contingencies, you have to think about contingencies that are realistic, and we’re obviously – we work through various scenarios. But there’s so many permutations right now to start talking about specific contingencies, I think, would be counterproductive.