TCS hit with fresh $70 mln charge
Tata Consultancy Services (TCS) will take a one-time exceptional charge of $70 million in the first quarter of FY27 after the US Supreme Court declined
Tata Consultancy Services (TCS) will take a one-time exceptional charge of $70 million in the first quarter of FY27 after the US Supreme Court declined to hear its appeal in a long-running trade secrets dispute, taking the Indian IT giant's total exposure in the case to $220 million.The US Supreme Court on June 15 allowed a lower court ruling awarding damages to DXC Technology to stand, effectively bringing an end to TCS's legal challenge in the matter.TCS said it had already provided $150 million towards the case and will now recognise an additional $70 million charge to cover damages, accrued interest and legal expenses."The Company has assessed the matter and based on the current status of the proceedings, has decided to recognise an additional provision of $70 million as a one-time exceptional charge in Q1 FY27," the company said.The additional provision takes TCS's total financial exposure in the case to $220 million.For context, TCS reported a net profit of 137.18 billion rupees ($1.45 billion) in the fourth quarter.The dispute dates back to a lawsuit filed in 2019 in a Dallas federal court by Computer Sciences Corporation, DXC Technology's predecessor. The suit accused TCS of improperly using confidential information obtained through employees hired from Transamerica to develop a competing life insurance administration platform.According to the complaint, TCS recruited around 2,200 employees from Transamerica and allegedly leveraged their access to the insurer's proprietary systems and information.In 2023, a jury found that TCS had wilfully misappropriated trade secrets and recommended damages of $210 million. However, US District Judge Brantley Starr later reduced the award to $168 million, comprising $56 million in compensatory damages and $112 million in punitive damages.The reduced award was upheld by the 5th U.S. Circuit Court of Appeals in 2025.In its appeal before the US Supreme Court, TCS argued that DXC should not have been awarded unjust enrichment damages without demonstrating actual losses and contended that the punitive damages were excessive.DXC, for its part, maintained that the lower courts had correctly applied the law and that the ruling did not warrant further review by the country's highest court.With the Supreme Court declining to intervene, the litigation appears to have reached its conclusion, paving the way for TCS to account for the remaining financial impact in its upcoming quarterly results.
The BriefWire