Bloomberg News

Cognizant Hiring 10,000 U.S. Workers Amid Outsourcing Debate (3)

December 02, 2013

Cognizant Technology Solutions Corp. (CTSH:US), one of the largest providers of outsourcing services, plans to hire about 10,000 U.S. workers, potentially soothing concerns that the industry is harming the domestic job market.

The move, which President Gordon Coburn announced at a speech in Texas today, will add to the company’s 29,000-employee domestic workforce over the next three years. The new positions will be full-time jobs in science, technology, engineering and math -- or STEM -- fields.

A legislative battle over immigration reform has put a spotlight on outsourcing providers and their effect on U.S. technology jobs. Companies such as Cognizant and Infosys Ltd. (INFO) often rely on work visas to bring in consultants from overseas, rather than hiring local workers to do the job. In October, Infosys agreed to pay a record fine to the federal government after a probe into its use of visas.

For Cognizant, an improved U.S. economy is making it more feasible to hire full-time workers in the country, Coburn said in an interview. The company has raised its forecast for profit and sales twice this year.

“The stabilization of the economy in the U.S. has given our clients more comfort in innovation and investing in growing their own top line,” Coburn said. “There is clearly long-term demand for skilled technology professionals here in the U.S. We are working hard to identify the talent to meet our clients’ needs.”

STEM Effort

Cognizant also will award a three-year, $150,000 grant to Texas A&M University to support the school’s BioForce Initiative, which tries to lure students into STEM education. To help recruit in the area, the company will establish College Station, Texas -- the home of Texas A&M -- as a new base of U.S. operations. Cognizant expects to create about 750 new jobs in the state, Coburn said in today’s presentation, which included a speech by Texas Governor Rick Perry.

Shares of the company, whose official headquarters will remain in Teaneck, New Jersey, have climbed 27 percent this year, lifted by its improving outlook. The stock was little changed today, closing at $93.56 in New York.

Cognizant relies on a global workforce of about 166,400 employees -- including staff in lower-cost countries such as India -- to provide outsourcing help and other services. In addition to the 10,000 domestic hires, the company plans to bring employees to the U.S. from other parts of the world.

Rosy Outlook

Cognizant must be confident it can command high enough prices from U.S. customers to justify the hiring spree, said James Friedman, an analyst at Susquehanna International Group in New York.

“Those 10,000 are going to make more than your average Cognizant employee,” he said. “This would suggest that Cognizant has a pretty good view on pricing.”

Today’s move also may be an attempt to prepare for any future immigration reform, Friedman said.

Legislation that passed the Senate in June would have imposed higher costs on H-1B visas for temporary, highly skilled workers. Cognizant relies heavily on the visas, so hiring local workers would serve as a hedge against immigration changes. For now, though, that version of the bill isn’t moving forward. House Republican leaders said they won’t consider the Senate measure, opting instead to pursue a piecemeal approach through several bills.

President Barack Obama’s administration also has pushed to promote a STEM-educated domestic workforce. Obama said in October at a Brooklyn, New York, high school that other nations are pulling ahead of the U.S. in competitiveness because of a lack of STEM students.

“Cognizant is one of the largest recruiters of STEM professionals in the U.S., and we are facing a severe shortage of STEM talent,” Coburn said. “Rather than sitting on the side, Cognizant is doing something about it.”

To contact the reporter on this story: Alex Barinka in New York at abarinka2@bloomberg.net

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


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