TCS Faces $70 Million Setback After US Supreme Court Rejects Appeal
Tata Consultancy Services (TCS) will incur a one-time special charge of $70 million in the first quarter of FY27 following the US Supreme Court's decision not to hear its appeal in a prolonged trade secrets conflict, raising the Indian IT company's total liability in the matter to $220 million.
On June 15, the US Supreme Court upheld a lower court decision that granted damages to DXC Technology, effectively concluding TCS's legal dispute regarding the issue.
TCS disclosed that it had previously allocated $150 million for the case and will now acknowledge an extra $70 million charge to address damages, accrued interest, and legal costs.
"The Company has evaluated the situation and, considering the present status of the proceedings, has opted to acknowledge an extra provision of $70 million as a one-time exceptional expense in Q1 FY27," the company stated.
The extra provision raises TCS's overall financial exposure in the case to $220 million.
TCS disclosed a net profit of 137.18 billion rupees ($1.45 billion) for the fourth quarter.
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The conflict originates from a lawsuit initiated in 2019 in a federal court in Dallas by Computer Sciences Corporation, which is the predecessor of DXC Technology. The lawsuit claimed that TCS misused confidential information acquired from employees recruited from Transamerica to create a rival life insurance administration platform.
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The complaint states that TCS hired approximately 2,200 employees from Transamerica and purportedly utilized their access to the insurer's confidential systems and data.
In 2023, a jury determined that TCS had intentionally misappropriated trade secrets and suggested damages of $210 million. Nonetheless, US District Judge Brantley Starr subsequently lowered the award to $168 million, which includes $56 million in compensatory damages and $112 million in punitive damages.
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The diminished award was confirmed by the 5th U.S. Circuit Court of Appeals in 2025.