TCS loses appeal in DXC dispute, must pay $194 million

Tata Consultancy Services has been ordered to pay $194 million in damages after a US appeals court upheld a ruling that the IT services firm misused trade secrets belonging to DXC Technology.

The Hindu BusinessLine reported that the US Court of Appeals affirmed an earlier district court judgment, which found TCS liable for misappropriating DXC’s confidential material to win a major contract and develop its own software platform. The decision retains the full damages award while lifting an injunction that had restricted TCS from using certain elements of its BaNCS platform going forward.

DXC, formerly known as Computer Sciences Corporation, had alleged that TCS used its trade secrets to secure a $2.6 billion deal with Transamerica and accelerate development of BaNCS, its core banking solution. The district court had directed TCS to pay more than $56 million in compensatory damages, $112 million in exemplary damages and nearly $26 million in prejudgment interest.

TCS had appealed, arguing that the exemplary damages were “legally excessive” and should be reduced or vacated. The appeals court rejected that contention and upheld the full award. While the injunction was removed, analysts said the monetary penalty remains significant for insurers that rely on BaNCS for day-to-day operations.

In a stock exchange filing, TCS said it was “evaluating various options, including review and appeal before the appropriate courts”, adding that it would “vigorously defend its position”. It said all necessary accounting provisions would be made in line with applicable standards.

The ruling lands at a sensitive time for India’s largest IT company. TCS’s valuation premium over rivals Infosys and HCLTech has narrowed, margins have come under pressure and investors have grown more cautious in a softer demand environment. Analysts expect competitors to highlight the episode as evidence of stronger governance and tighter controls in their own operations.

Sanchit Vir Gogia, chief analyst and founder of Greyhound Research, said the verdict carries a broader message for the industry. “The cost of violating IP boundaries now far outweighs any perceived short-term benefit,” he said, noting that between the Epic Systems case and the DXC ruling, TCS “has burned through almost half a billion dollars”.

He added that such sums could otherwise have been deployed for acquisitions, research programmes or product expansion — areas critical for IT firms seeking to stay competitive in a rapidly consolidating market.

The case underscores increasing judicial scrutiny of intellectual property practices in the technology services sector, raising the stakes for firms handling proprietary client systems and data. With further legal options still on the table, TCS must decide whether to pursue another appeal or close a costly chapter in its US litigation history.