Infosys counters that Ravi Kumar delayed software before joining as Cognizant CEO

Infosys Ltd filed a complaint in a US court on Thursday, claiming that Kumar delayed Helix, Infosys’s healthcare claims processing software, by 18 months when he was negotiating a switch to Cognizant. Kumar quit Infosys in October 2022 and took over as its rival’s CEO in January 2023.

Also read |  Ravi Kumar S. of Cognizant: The hungry CEO

The claim by Infosys in a filing dated 9 January—and reviewed by Mint—is a rare instance of a case being filed against its former employee.

The counter-complaint stretches the legal battle between the two of the world’s largest software services providers. The first salvo was fired by Teaneck, New Jersey-headquartered Cognizant in August last year, alleging that Bengaluru-based Infosys stole trade secrets from its healthcare software arm TriZetto.

“Cognizant is committed to upholding the highest standards of integrity in all business operations and will take decisive action to address any allegations that compromise competitive standing. Cognizant encourages competition, but competitors cannot use Cognizant's IP to unfairly compete, as Infosys has done. Cognizant's software products are widely used in the marketplace for being best-in-class and most preferred among customers," said the company in an emailed response to Mint’s queries.

Own healthcare solution

Infosys said it developed its own healthcare solution Helix as a competitor to Facets and QNXT, the software products owned by Cognizant. Kumar was then a president at Infosys and played a critical role in its development, the complaint said.

“But Kumar’s optimism and excitement for the Infosys Helix product suddenly changed in Spring 2022. He began to pull back support of Infosys Helix, declining requests for needed resources, which delayed the completion ... by at least 18 months," read Infosys’s counterclaim.

It accused Cognizant of poaching talent critical to Helix and hindering its development.

Also read |  US court rules Cognizant discriminated against non-Indian employees

“To date, Infosys has invested significant funds and resources to build Infosys Helix, but the product and business were delayed by at least a year and a half due to decisions made by Kumar, with the help of (Shveta) Arora and (Ravi Kiran) Kuchibhotla, while they were plotting their move to Cognizant," said the company in its complaint.

Arora is SVP, global head of consulting at Cognizant, while Kuchibhotla is chief strategy officer at the company.

Infosys, which reported $18.6 billion in revenue last fiscal, said it “suffered millions of dollars in lost sales and increased costs due to Cognizant’s anticompetitive conduct".

Monopoly in claims processing

The Bengaluru-based company said Cognizant is not allowing business to flourish from the healthcare segment because of its alleged monopoly in the claims processing business in the US.

“This is an antitrust case about Cognizant’s anticompetitive scheme to achieve, maintain, and enhance its dominance in both the healthcare payor software market and the related IT services market for that software," read Infosys’ counterclaim filed by Brent Caslin, representing Infosys through Chicago-based law firm Jenner & Block LLP.

Cognizant acquired QNXT and Facets in 2014 by taking over TriZetto, which provides administrative solutions in the healthcare space. These products are used by health insurance companies in the US to process claims.

Both Infosys and Cognizant have been servicing clients in the healthcare sector using the two software products.

Also read |  Cognizant files lawsuit against Infosys over trade secrets; Infy refutes claim

The Bengaluru-headquartered information technology (IT) services company accused Cognizant of six counts of not just hurting potential revenue but also establishing anti-competitive practices.

It alleged Cognizant indulged in anti-competitive practices by limiting training of executives who were to service clients using Facets and QNXT software. It also said that Cognizant was rejecting vendors who could maintain the two platforms, and was charging high fees from clients because of lack of competing softwares that could process insurance claims.

“Because of Cognizant’s anticompetitive scheme, healthcare payors covering 65% of the United States’s insured population continue to use Cognizant’s outdated software and pay more for that software and related IT services than they would absent Cognizant’s conduct in a competitive market," the company said in its lawsuit.

Not the first instance

Infosys’s complaint mentioning Kumar is not the first instance of Cognizant executives being questioned of their integrity.

In November 2023, Wipro filed a lawsuit against its former executive Jatin Dalal for joining the rival firm within a year of leaving Wipro. Dalal was to take over as chief financial officer of Cognizant in the following month.

Which means Cognizant’s CEO and CFO are under the firing line by their former employers.

“The complaint definitely puts the spotlight on Cognizant’s leadership team and the company will have to answer more and more questions from stakeholders. The board will also have to probably pitch in to address this issue," said a former executive of one of India’s largest IT services companies on condition of anonymity.

Cognizant’s earnings from clients in the healthcare segment are four times that of Infosys.

While Infosys gets about 7.5% or $1.4 billion in revenue from clients in the life sciences sector, Cognizant gets 29.3%, or $5.7 billion.

Also read |  Rajesh Nambiar quits Cognizant to lead Nasscom; Rajesh Varrier his successor

Infosys and Cognizant have been locked in a battle to be India’s second largest IT services company. Infosys pipped Cognizant reported a revenue of $4.89 billion in the three months ended September 2024. However, Cognizant regained its lead with $5 billion in quarterly revenue a few days later.

While Cognizant follows a January-December financial calendar, Infosys follows April-March reporting.

Though Cognizant is listed abroad, more than 70% of its 336,300 employees are based out of India, a reason why it is considered an Indian heritage IT services company.

Infosys requested the court for a trial by jury to award a warning to Cognizant, prohibiting it from indulging in what it considers anti-competitive behaviour. It has also requested the court to award Infosys thrice the financial damages it has suffered including legal fees.