Wells Fargo: Analysis of Visa "Reform" Legislation
Wells Fargo says, “It took some time, but we we're finally able to get clarity on the rushed through legislation sponsored by Senator Schumer that increases professional visa fees and became law August 13. Assuming no offsetting operational moves, we estimate that offshore IT providers would have operating margin impacted by 15-40 basis points (bps) and EPS by $0.01-0.04 (~1% reduction).”
“We assume much of this can be offset through price increases and other model adjustments. More importantly, we believe that the probability of more stringent anti offshoring legislation long proposed by Senators Durbin and Grassley could see a more receptive audience. If the Durbin-Grassley 50:50 rule went into effect, this would drive down utilization of U.S.-based employees, and therefore we estimate impact operating margin by 75-180bps and EPS by $0.03-0.25 (~6% reduction), before offsetting moves by the providers. We are not changing any estimates or investment ratings at this time, but we want to highlight that "political risk" is now much higher, in our view,” the analysts add.
