TCS Struck with $194 Million Fine in US District Court

Tata Consultancy Services (TCS) announced in a stock exchange filing that they received an adverse order from the United States District Court for the Northern District of Texas, Dallas Division. The court ruled that TCS must pay $194.2 million to Computer Sciences Corporation (CSC), now known as DXC Technology Company (DXC).

Case Background

The lawsuit by CSC accused TCS of improperly using CSC’s confidential information. The context of this dispute involves a significant contract TCS won in 2018, valued at $2.5 billion, from the U.S. insurer Transamerica. TCS was engaged to enhance digital capabilities and consolidate services for over 10 million policies onto a single platform. However, in June 2019, Transamerica terminated this $2 billion, 10-year deal due to economic pressures.

In 2019, DXC alleged that former Transamerica/MSI employees at TCS had used CSC software for policy management. Evidence included emails among TCS employees discussing solutions found in the Vantage software. Notably, a TCS employee reportedly copied and sent actual Vantage source code, including specific calculations, to colleagues. VantageOne and the DXC Wealth Management Accelerator are known for managing insurance tasks like policy administration and product development.

Court Decision

The court ruled that TCS must pay a total of $194.2 million, which includes $56,151,583 in compensatory damages, $112,303,166 in exemplary damages, and $25,773,576.60 in prejudgment interest. Additionally, the court has imposed specific injunctions and other remedies against TCS.

TCS’s Response

Despite the judgment, TCS believes it has strong grounds to challenge the ruling and plans to pursue a review petition or an appeal in the relevant court. The company received the court order on June 14, 2024, and has stated that the verdict is not expected to have a significant impact on its financials or operations. Nonetheless, TCS is taking proactive steps to safeguard its interests and manage the legal challenges arising from this decision.