U.S. Jury Clears Tata Consultancy of Anti-American Bias Claims

(Bloomberg) -- A jury in California rejected claims that Tata Consultancy Services Ltd. discriminated against American workers in favor of staffing its U.S. offices with Indians.

The verdict is a major victory for the Indian outsourcing industry, whose business model depends heavily on exporting engineers to the U.S. 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 U.S. 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 U.S. visa regulation front for some years,” said Anurag Rana, an analyst with Bloomberg Intelligence.

Shares of TCS fell 0.9 percent in early Mumbai trading. The stock has gained 46 percent this year.

The trial cast a spotlight on work-visa programs that companies use to bring overseas workers to the U.S., 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 U.S. soil.

The ex-employees who sued had accused TCS of a “systematic pattern and practice of discrimination” by favoring Indian ex-pats and visa-ready workers from India for U.S. 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 U.S. 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 U.S., 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 U.S. Employees were terminated because they were unwilling to move to cities in the U.S. 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 U.S., and its primary customers are in the financial services sector.

To contact the reporter on this story: Kartikay Mehrotra in Oakland, California at kmehrotra2@bloomberg.net

To contact the editors responsible for this story: Elizabeth Wollman at ewollman@bloomberg.net, Peter Blumberg

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