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TCS ruling a blessing in disguise for the IT industry

TCS ruling a blessing in disguise for the IT industry

The verdict is an acknowledgment of increased efforts by Indian IT companies in furthering the 'American' cause .

Last Saturday brought a huge relief not just for TCS but also for India IT services sector in general, when India's $100 billion market cap company was cleared by jury members in a class action suit that accused the company of practicing discrimination against locals in the US on jobs front.

A relieved company in its statement said, "We have always maintained, the claims made in this case were baseless and we are gratified that the jury agreed." The suit was pertaining to TCS having fired more benched workers from America compared to South Asian counterparts during 2011-14, which was contended as a discriminatory practice.

TCS further added, "United States is the world's business and technology leader and very important to TCS, where we have been operating for over 40 years. Skilled American workers are critical to the success of the US business and to the nation's economic success, and we will continue to invest heavily in the country's workforce, academic alliances and our extensive youth STEM education initiatives."

With several suits against other Indian IT services companies still pending in many US courts on similar grounds, this verdict comes in as almost an acknowledgment of increased efforts by Indian IT companies in furthering the 'American' cause .

According to IT research firm, Offshore Insights' CEO Sudin Apte, the verdict has a lot of positive impact on the perception side. "Both clients and companies now can be a little comfortable that there is legal backing to position them as job creators and who are not just body dumping, but in a way creating value and creating local jobs," he said.

"While this may not be a big deal in the long run, this has saved the company from further embarrassment. If we think about it the other way round, if they had lost the case there would have been a sizable embarrassment and repercussions for every relationship of every other Indian company, so that has stopped and that is the big value."

Over the last 4-5 years the uncertainties around the H1B visa rules, increased scrutiny by DHS and also litigations, has forced the IT services companies to step up not just recruitment but also investment  into building technology hubs.

Take for instance Infosys, which paid nearly $34 million in 2013 to settle a visa violation investigation and in 2017 around $1 million for the same reason again. The company opened its first U.S Technology and Innovation Hub in Indianapolis in March this year.

The company also has committed to hire 2,000-3,000 new jobs by the end of 2023 in Indianapolis alone. For TCS, which has over 147 nationalities represented in the workforce, close to 60 per cent of revenue growth comes from the American market. In a study conducted by The Cambridge Group in 2017, TCS was seen to be a leading job creator in the American IT Services sector recruiting more than 12,500 US employees from 2012-2016.