Infosys has filed a counterclaim against its rival Cognizant in a Texas federal court, accusing the US-based company of engaging in anti-competitive practices and deliberately poaching its senior executives. The Bengaluru-based IT giant alleges that Cognizant’s actions, including contractually restricting clients from awarding IT services to competitors and withholding critical software training, have hindered its ability to compete effectively in the market.
The legal battle follows an earlier lawsuit filed by Cognizant's subsidiary, TriZetto, in August of the previous year, which accused Infosys of misappropriating trade secrets related to TriZetto's healthcare insurance software, specifically its Facets and QNXT platforms. These platforms are widely used by healthcare insurers for automating administrative tasks, and their centrality to the dispute has escalated tensions between the two IT giants.
Why Did Infosys File the Counterclaim?
Infosys's counterclaim primarily targets Cognizant’s alleged actions of systematically recruiting its senior executives, including S Ravi Kumar, who took over as CEO of Cognizant in 2023. Infosys claims this move significantly slowed down the development of its competing software, Infosys Helix. The Indian IT firm also accuses Cognizant of deliberately undermining its competitive position by engaging in anti-competitive practices, including restrictive contractual clauses that hinder fair competition.
In its legal filing, Infosys is seeking three times the damages it claims to have incurred as a result of these actions, although the total amount of damages has not been disclosed. The counterclaim also includes a demand for attorney fees. This action is seen as an aggressive response to what Infosys claims is a concerted effort by Cognizant to hurt its growth and development in the highly competitive IT services sector.
Cognizant’s Response
In response to Infosys’s counterclaim, Cognizant has strongly denied the allegations and reiterated its stance on protecting its intellectual property. The company has stated that it will take firm action against what it perceives as an improper use of its intellectual property by Infosys. In a statement, Cognizant emphasized that while it supports healthy competition, it cannot allow competitors to use its intellectual property to unfairly compete.
Cognizant’s statement reflects its position that Infosys’s actions go beyond typical competitive behavior and cross into the territory of IP misuse. The company has indicated that it intends to defend its position aggressively in court and ensure that its intellectual property is protected.
The Legal Dispute Between TriZetto and Infosys
The core of the dispute between Infosys and Cognizant began with TriZetto’s claim that Infosys had repackaged its proprietary data and incorporated it into its own product, allegedly under the guise of "Test Cases for Facets." Infosys has rejected these accusations, arguing that Cognizant's anti-competitive actions, such as restricting clients from engaging with competitors and imposing exclusivity clauses, were designed to impede fair competition in the IT services market.
Infosys maintains that its actions were legitimate and that the competitive landscape was being skewed by Cognizant’s practices, which limit the ability of firms like Infosys to effectively compete for contracts and expand their offerings in the healthcare sector.
The Broader Implications
This legal battle, which is being fought in the US District Court for the Northern District of Texas, has garnered significant attention due to the potential ramifications for the broader global IT industry. The outcome of this dispute could have implications for how large IT services companies operate, particularly regarding recruitment practices, intellectual property rights, and competitive strategies.
As both companies continue to accuse each other of misconduct, the case is expected to intensify, with both Infosys and Cognizant likely to employ aggressive legal strategies. The resolution of this case will be closely watched by industry observers, as it could set important precedents in terms of competition and intellectual property rights in the IT services sector.
In the coming months, the legal proceedings will likely unfold with further developments, and the impact of the case on the competitive dynamics between the two firms—and the IT services industry as a whole—remains to be seen. Investors, industry analysts, and competitors will closely monitor the case, as it could shape future practices in the IT sector.
