TCS cleared by jury of claims of favouring Indians over Americans

Tata Consultancy Services Ltd, Asia’s largest outsourcer, and rivals Infosys and Wipro have all been squeezed by the Trump administration to hire more Americans on US soil.

business Updated: Nov 29, 2018 08:56 IST
Kartikay Mehrotra
TCS,Tata Consultancy Services,HCL Technologies
TCS, Asia’s largest outsourcer, and rivals Infosys and Wipro have all been squeezed by the Trump administration to hire more Americans on US soil.(Bloomberg)

A jury in California rejected claims that Tata Consultancy Services Ltd. has discriminated for years against American workers in favour of staffing its US offices with Indians.

The verdict is a major victory for the Indian outsourcing industry, whose business model depends heavily on exporting Indian engineers to the US. A federal jury in Oakland, California, sided Wednesday with TCS against four former employees who claimed they’d been sidelined and fired because they aren’t South Asian.

The case was the first of several accusing India’s big IT firms of hiring bias in the US to go to trial. HCL Technologies Ltd., Infosys Ltd. and Wipro Ltd. face similar claims.

“This is a shot in the arm for the industry, which has not seen anything positive come out on the US visa regulation front for some years,” said Anurag Rana, an analyst with Bloomberg Intelligence.

The trial cast a spotlight on work-visa programs that companies use to bring overseas workers to the US, a practice president Donald Trump has criticized in his protectionist push. TCS, Asia’s largest outsourcer, and rivals Infosys and Wipro have all been squeezed by the Trump administration to hire more Americans on US soil.

The ex-employees who sued accused TCS of a “systematic pattern and practice of discrimination” by favoring Indian ex-pats and visa-ready workers from India for US positions. That has resulted in a workforce that’s almost 80 percent South Asian, far greater than the 12 percent representation of South Asians in the US. IT workforce, according to the complaint.

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At trial, the plaintiffs cited statistical evidence that the odds of race and national origin not being a factor in TCS’s termination decisions are less than one in a billion. They said that since 2011, the company fired 12.6 percent of its non-South Asian workers in the US, compared with less than 1 percent of its South Asian employees.

TCS attorneys argued the company had no incentive to discriminate, having spent millions of dollars on building a local talent pool in the US. Employees were terminated because they were unwilling to move to cities in the US where TCS needed more engineers, the company said.

“We have always maintained the claims made in this case were baseless, and we are gratified that the jury agreed,” Ben Trounson, a spokesman for TCS, said in an emailed statement after the verdict. “The decisions we make about the hiring and retention of employees are based purely on their abilities and fit to serve our clients’ specific needs.”

A unit of the Tata Group, India’s largest industrial conglomerate, TCS employs more than 400,000 people worldwide, is valued at about $100 billion and posted revenue of $19 billion for the fiscal year that ended in March. Most of its revenue comes from the US, and its primary customers are in the financial services sector.

First Published: Nov 29, 2018 08:28 IST