Legal tangles kept IT firms busy in 2018
Cases included class-action suits, employment discrimination and deficiency in services

In a major setback to the information technology sector, the year that just ended few days back witnessed a large number of lawsuits against infotech services giants, both nationally and globally.

The court cases against such companies included employment discrimination, deficiency in services and class-action suits. While some of them were settled out of court, a few went into arbitration.

For instance, Bangalore-based IT major Wipro effected a $75-million settlement with its decade-old customer National Grid for release of all claims under a lawsuit the latter filed in a New York district court in 2017.

The electricity, natural gas and clean energy delivery company had filed a lawsuit against Wipro seeking damages of $140 million and additional costs related to an enterprise resource planning (ERP) implementation project.

National Grid supplies energy to more than 20 million people through in New York, Massachusetts and Rhode Island of the USA.

Another IT giant, Tata Consultancy Services (TCS), a milch cow of Tata Sons, faced an employment discrimination case after a court in California acquitted the company of charges that it had bias towards Indian employees over US citizens.
Another oft-repeated accusation has been Indian companies abusing the H-1B visa process to bring Indians to the US rather than hire locals.

In a similar case, a former HCL Technologies employee in the US filed a case against the company alleging that it promoted and chose H-1B visa holders to work on a project, who were mostly Indians.

Infotech firm Cognizant has been awarded partial relief in a class-action lawsuit filed in the US against its chief executive officer Francisco D’Souza, chief financial officer Karen McLoughlin and former president Gordon Coburn alleging improper payments related to securing SEZ (special economic zone) licences in India. In securing permissions, the company alleged to have violated the Foreign Corrupt Practices Act (FCPA).

In the Cognizant case, the lawsuit said the IT major signed agreements in 2015 to expand its global delivery centre in Coimbatore and Chennai, which could house over 20,000 professionals. The lawsuit alleged that payments were declared as capital expenditures in the books rather than operating expenses, disguising outgo and inflating the reported investments in SEZ facilities.

In March 2018, Cognizant also said that it had incurred $27 million in costs related to the FCPA investigation and connected lawsuits.

In another case, US news website Axios reported that San Francisco-based Northgate Capital sued Tech Mahindra after the latter missed a payment schedule.