Cognizant signed Gilead for five years; Washington shut its green-card door two days later

A five-year deal signed two days before the door shut

On October 6, Surya Gummadi, Cognizant's▲+2.78% — Cognizant, up 2.78 percent today president for the Americas, signed a five-year extension of its technology work for the drugmaker Gilead Sciences↗ ¹. Two days later the US Labor Department suspended his employer, along with Microsoft, Adobe, Infosys, Tata Consultancy Services, Wipro, HCL Technologies and Capgemini, from the PERM program↗, the labor-certification step an employer clears before sponsoring a foreign worker for a green card ²³. The Inference reported on October 11 that Washington froze Microsoft out of green cards and spared the two bigger visa sponsors.

New PERM filings from the eight are refused, and pending ones go unprocessed ². Cognizant↗'s third-quarter report on October 29 is the first print that tests what the October 13 rally priced in ¹⁰.

What froze, and who was spared

The H-1B work visas themselves were left alone ⁴. A suspended firm's engineer can still be sponsored for a green card, just not by the firm he works for. Labor Secretary Keith Sonderling put the scale of the case in numbers: since 2009, he said, the eight firms have requested almost 3 million foreign workers, drawing more than 230,000 H-1B approvals and 100,000 labor certifications↗ ⁵.

The biggest sponsors were not suspended. Amazon▼−0.45% — Amazon, down 0.45 percent today took 19,178 H-1B approvals in fiscal 2025 and Meta▲+2.74% — Meta, up 2.74 percent today 6,294, against Microsoft's▲+0.43% — Microsoft, up 0.43 percent today 6,258, and neither was suspended ². In 2026 petitions Amazon leads at 35,426, with Cognizant second and Microsoft fourth ⁵.

The market priced containment, the filings price exposure

On October 13 the Nifty IT index, the benchmark for India's listed IT exporters, jumped 4.4 percent, with HCL up 7 percent, on earnings and on the read that PERM is survivable ⁶. TCS says its PERM filings ran in the single digits over two years, and Infosys told its exchange on October 10 it expects no material impact↗ ⁴. Analysts at Kotak Institutional Equities told clients the affected employees are a small subset of an already-localized US workforce ⁶.

That math rests on workforces that mostly deliver from India. Cognizant, the only US-headquartered firm among the six suspended outsourcers, earned 75.3 percent of its $5.5 billion second-quarter revenue in North America↗ ⁷. Its GAAP operating margin sits at 15.9 percent against a 16.7 percent peak in early 2025, and full-year guidance of 16.0 to 16.2 percent adjusted assumes 20 to 40 basis points of expansion ⁷⁸.

The margin turn is timed to the same quarter as the freeze's costs

Wedbush analyst Steven Wahrhaftig holds the bull case at Outperform with a $70 target↗, against consensus of $1.46 a share on $5.65 billion for the October 29 print ⁹. The turn rests on Project Leap, a restructuring that cost $84 million in the second quarter out of a $230 to 320 million bill, the remainder spread across the third and fourth quarters, with the savings arriving only in fiscal 2027 ⁹⁷. Kotak flags subcontractor costs pressing margins near term↗, so the two pressures land in the same quarter ⁶¹¹.

The October 29 call answers it

Kotak names its own limit: risk turns material only if restrictions reach existing work authorizations, client sites or outsourcing, which this measure does not ⁶. Vice President JD Vance calls the H-1B program rife with fraud, though the White House has offered no evidence of fraud by Microsoft, and Microsoft says 80 percent of its roughly 6,000 filings covered existing staff ². Infosys reports on October 23; Cognizant follows on October 29, before the open ⁴¹⁰. The question on that call is narrow: does the 16.0 to 16.2 percent guide survive without a new line for immigration and subcontractor costs?