Why are Infosys and Cognizant in a legal tussle? Premium
The Hindu
A Cognizant subsidiary took Infosys to court, alleging that the IT major had stolen data from their proprietary software.
Story so far: In August 2024, TriZetto, a Cognizant subsidiary and healthcare solutions provider, took Infosys to court, alleging that the IT major had stolen data from their proprietary software. Four months later, in January, Infosys denied allegations and filed a countersuit against Cognizant CEO Ravi Kumar S, former Infosys executive, for deliberately delaying the launch of its health platform, Helix. Infosys alleged that the U.S.-headquartered IT firm resorted to anticompetitive activities like poaching key personnel and imposing restrictive contractual barriers that stopped its clients from going to competitors and even declining training them on Infosys software. The Bengaluru-based IT giant claimed triple the damages it suffered, along with legal costs.
The case spotlights a bitter rivalry between two major IT services providers that offer similar services, and underlines the need for a rulebook for senior-level executive transitions.
The lawsuit initially filed by Cognizant in the U.S. District Court for the Northern District of Dallas, Texas, states that Infosys breached multiple Non-Disclosure Agreements (NDAs) to illegally access their software applications -- Facets and QNXT. The misappropriated data from these solutions was then allegedly leveraged by Infosys to build their own flagship healthcare software, Infosys Helix. Both these software solutions work on automating cumbersome administrative tasks for health insurance companies, like processing claims, billing, and enrolling members. The complaint noted that Infosys had copied TriZetto’s software, repackaging it while also developing software to extract confidential data from QNXT.
“When confronted, Infosys obfuscated to the maximum extent possible, asking TriZetto to simply trust, based on nothing, that there had been no wrongdoing. When TriZetto refused to take Infosys on its word and demanded an audit of Infosys’ use of TriZetto’s information, as explicitly permitted under the NDAs for any reason (much less rampant trade secret appropriation), Infosys refused to comply,” Cognizant said .
Executives frequently switching between IT majors are not uncommon, but tensions were building between Infosys and Cognizant for some time regarding this issue. For instance, there was Rajesh Varrier, a former Infosys executive who served as EVP, Head of Global Services, and Infosys Americas. On September 2, 2022, Rajesh Varrier was appointed as the Global Head of Operations at Cognizant.
Mr. Kumar, who held the positions of President and Deputy COO at Infosys, departed in October 2022 and assumed the top role at Cognizant, effective January 2023. This recent move has escalated the situation.
Infosys’ countersuit revealed its anger. It explained that Mr. Kumar had initially praised Infosys Helix during his time at Infosys, calling it a “challenger to traditional platforms.” However, his enthusiasm for the product waned randomly early in 2022. Consequently, any support he had provided for the platform gradually diminished as he stopped requesting the necessary resources. This ultimately delayed the project’s completion by 18 months.
