Infosys denies Ravi Kumar delayed software development before becoming Cognizant CEO

Infosys Ltd filed a complaint in a US court on Thursday, alleging that Kumar delayed Helix, Infosys’ healthcare claims processing software, for 18 months while he negotiated a move to Cognizant. Kumar left Infosys in October 2022 and took over as CEO of its rival in January 2023.

The suit by Infosys in a January 9 statement reviewed by Mint is a rare instance of a case being filed against its former employee.

The counter-complaint prolongs the legal battle between two of the world’s largest software vendors. The first salvo was fired by Cognizant, headquartered in Teaneck, New Jersey, last August, alleging that Bengaluru-based Infosys had stolen trade secrets from its TriZetto healthcare software division.

“Cognizant is committed to maintaining the highest standards of integrity in all business operations and will take decisive action to address any allegations that jeopardize competitiveness. Cognizant encourages competition, but competitors cannot use Cognizant’s IP for unfair competition, as Infosys has done. Cognizant’s software products are widely used in the market as they are best-in-class and most popular among customers,” the company said in an emailed response to Mint queries.

Your own healthcare solution

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

But Kumar’s optimism and excitement about the Infosys Helix product suddenly changed in the spring of 2022. It proceeded to terminate support for Infosys Helix by denying requests for necessary resources, delaying completion … by at least 18 months,” Infosys counterclaimed. .

He accused Cognizant of poaching critical talent from Helix and hindering its growth.

“To date, Infosys has invested significant funds and resources to build Infosys Helix, but the product and business have been delayed by at least a year and a half due to decisions made by Kumar with the help of (Sweta) Arora and (Ravi Kiran). ) Kuchibhotla while they were planning their transition to Cognizant,” the company’s complaint said.

Arora is senior vice president, global head of consulting at Cognizant, and Kuchibhotla is the company’s chief strategy officer.

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

Monopoly in handling claims

The Bengaluru-based company said Cognizant is not allowing business to thrive in the healthcare segment due to its alleged monopoly in the claims processing business in the US.

“This is an antitrust case alleging Cognizant’s anticompetitive scheme to achieve, maintain, and strengthen its dominance in both the market for healthcare payer software and the market for related IT services for that software,” Infosys said in a counterclaim filed by Brent Caslin, who represents Infosys through Chicago. law firm of Jenner & Block LLP.

Cognizant acquired QNXT and Facets in 2014 with the acquisition of TriZetto, which provides healthcare administration solutions. These products are used by health insurance companies in the US to process claims.

Both Infosys and Cognizant serve clients in the healthcare sector with two software products.

The Bengaluru-headquartered information technology (IT) services company has accused Cognizant on six counts of not only undermining potential revenue but also instituting anti-competitive practices.

It alleged that Cognizant engaged in anti-competitive practices by restricting the training of executives who were supposed to serve customers using Facets and QNXT software. It also said Cognizant was turning away vendors that could support the two platforms and charging high fees to customers because there was no competing software that could handle insurance claims.

“Because of Cognizant’s anticompetitive scheme, healthcare payers covering 65% of the insured population in the United States continue to use legacy Cognizant software and pay more for that software and related IT services than they would in the absence of Cognizant in a competitive market,” the company said. your claim

Not the first case

The Infosys complaint naming Kumar is not the first time Cognizant executives have been questioned about their integrity.

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

That means Cognizant’s CEO and CFO are under fire from their former employers.

“The complaint is clearly drawing attention to Cognizant’s leadership, and the company will have to answer more and more questions from stakeholders. The board is also likely to have to be involved in solving this problem,” said a former executive at one of India’s largest information services companies, speaking on condition of anonymity.

Cognizant’s revenue from healthcare clients is 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.

Infosys and Cognizant have entered the fray to become the second largest information services company in India. Infosys overtakes Cognizant to report revenue of $4.89 billion for the three months ended September 2024. However, Cognizant regained the lead a few days later with $5 billion in quarterly revenue.

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

Although Cognizant is incorporated overseas, more than 70% of its 336,300 employees work in India, making it an Indian IT services company.

Infosys has asked the court for a jury trial to issue a warning to Cognizant, barring it from engaging in what it says is anti-competitive conduct. He also asked the court to award Infosys three times the amount of financial losses it suffered, including legal costs.