In a January 9 lawsuit with a US federal court, Northern District of Texas, the Bengaluru IT major has requested for a jury trial and is seeking triple damages, legal costs, and the invalidation of restrictive agreements imposed by Cognizant, as per the lawsuit filed.
Making strong contentions, Infosys has stated that Cognizant resorted to monopolistic and restrictive tactics to stifle competition from more innovative and efficient rivals, like Infosys.
In its counter claim, Infosys, which started developing its healthcare insurance offering Helix in 2019, has alleged that Cognizant chief Kumar, a former Infosys executive, delayed its launch restricting resources for the platform after he began talks of joining Cognizant in 2022.
According to the lawsuit, Kumar, who led the Infosys Helix product, “began to pull back support of Infosys Helix, declining requests for needed resources, which delayed the completion of Infosys Helix by at least 18 months.”
In October 2022, Kumar resigned from Infosys and joined as Cognizant CEO in January 2023.
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The counter claim comes around five months after Cognizant’s subsidiary unit TriZetto filing a case against Infosys, in August last year, accusing the Bengaluru-headquartered IT major of stealing trade secrets and proprietary information related to healthcare insurance software.In its defense, Infosys had then denied all allegations stating it was aware of the lawsuit and will “defend its position in the court”.
“Cognizant’s anticompetitive scheme to stall Infosys Helix’s launch included the targeted recruitment of key senior executives responsible for Infosys Helix, including Kumar, Shveta Arora and Ravi Kiran Kuchibhotla, and incentivizing them to delay and obstruct the development and marketing of Infosys Helix in the months leading up to their departures,” the lawsuit adds.
Cognizant’s conduct, Infosys claims, has harmed competition in the healthcare payor software and related IT services markets, thereby harming payors—the direct purchasers of these products—in the form of paying higher prices for lower quality products and service.
Infosys and Cognizant did not respond to requests for comment.
Cognizant’s software includes TriZetto’s Facets and QNXT, used by healthcare insurance companies to automate administrative tasks. According to its lawsuit, Infosys misused TriZetto’s software to create ‘Test Cases for Facets,’ which improperly repackaged TriZetto’s data into an Infosys product.
Slowdown and competition
During a period of macroeconomic slowdown over the past around 7-8 quarters, IT services companies are struggling for growth and have seen aggressive cross-hiring and movement of senior executives leading to intense competition.
Meanwhile, Infosys and Cognizant have long fought for the second spot with Infosys most recently closing in on Cognizant.
Data shows that the revenue gap between the two IT giants has narrowed drastically over the past five years from $4.3 billion in 2019 to just $1 billion in 2023.
Interestingly, Kumar is a former Infosys executive who also hired several senior executives from his former employer to Cognizant after taking charge as the CEO in January 2023. This led to bitter missives sent by Infosys to Cognizant accusing the latter of conducting unethical poaching practices.
Cognizant, which hired Wipro’s two senior executives including the chief financial officer Jatin Dalal, was also embroiled in a legal tussle for breach of employment contracts. However, after months-long battle, last year in July, Cognizant settled the case by agreeing to pay Dalal about $0.5 million as settlement payment and reimbursement of his legal fees.
