Is TCS anti-American? Ruling could impact laws on foreign workers

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A private security guard stands at the exit gate of the headquarters of Tata Consultancy Services (TCS) in Mumbai, India October 13, 2016. REUTERS/Shailesh Andrade/Files

NEW YORK – Tata Consultancy Services, Asia’s largest software maker and outsourcing firm, is fighting critical court battles in the United States, to avoid forking out hundreds of millions of dollars in a lawsuit, evade being labeled as a ‘cheat’ and worse, tarnished as being anti-American, in their hiring practices. The ruling on these cases will have far reaching repercussions not just on IT companies, like TCS and Infosys, it could impact and influence new laws on foreign workers by the Trump administration.

In what can be termed, albeit ironically, as the best news so far this year for the beleaguered Mumbai-headquartered firm TCS, the Western District Court of Wisconsin issued an order reducing an earlier $940 million awarded to the US healthcare software firm Epic Systems, to $420 million.

It’s of course, a mere coincidence, that that number of 420, or as it’s said in Hindi ‘charsobees’ – which down the road if it stays, despite a likely appeal – has a nefarious connotation in Indian colloquial language. It means a fraudster or trickster. The origin of the word is attributed to the Indian Penal Code, section 420, which denotes offences relating to cheating and dishonestly inducing delivery of property.

Ironically, the $420 million figure materialized after Epic had, last year, requested for a lower award, to $720 million, from the original $940 million, The quantum of the jury award violated a Wisconsin law which prevents the award of punitive damages of more than twice the compensatory damages, reported the Economic Times. Now, it’s been further trimmed down to $420 million.

Epic had accused TCS of cheating: it claimed that TCS employees were brought on as consultants to a Kaiser Permanente Sunnyside Medical Center in Portland, Oregon, to help implement an Epic system there and took more than 6,000 documents containing Epic’s system development information by creating a fake user account. Epic said TCS used the illegally acquired information to create its own healthcare system, according to a report in Economic Times.

On another front, TCS is battling a far greater worry than having to shell out close to half a billion dollars, which it can take in its stride with only a few hiccups: being labeled anti-American.

Bloomberg reported that TCS is fighting a lawsuit where some individuals claim that TCS put into effect discriminatory hiring practices, and that as much as 79 percent of its U.S. workforce is South Asian, when that group makes up only 12.5 percent of the relevant labor market in the country.

TCS – like Infosys too who are embroiled in a similar lawsuit – contends it’s misleading to include employees on H-1B visa hired in India, and who work temporarily and “legally” in the U.S. It also says more than 40 percent of its job applicants are South Asians and that not everyone is keen on working for an India-based company or willing to relocate to take a job.

Earlier this week, at a hearing in federal court in Oakland, California, on whether to dismiss the case entirely, U.S. District Judge Yvonne Gonzalez Rogers said she would take the issue under submission, reported Bloomberg. She indicated that she would deny the motion for summary judgment, at least as far as it involves white U.S. employees who were fired from Tata. She was less impressed by the evidence that Tata discriminates against white job applicants.

The lawsuit against TCS was filed in 2015 by a white IT worker who claimed he was subject to “substantial anti-American sentiment” within the company and was ultimately terminated within 20 months despite having almost 20 years of experience in the field. He was later replaced as the lead plaintiff by two other men.

Bloomberg noted the judge didn’t rule on whether to certify the suit as a class action, which would expand it to include potentially thousands of American workers who either weren’t hired or were fired by TCS and other companies because of their race over the past six years.

That would be a calamitous situation for Indian IT companies with clientele in the US, who rely heavily on foreign workers on H-1B and other work visas, to take on contracts, fulfill work assignments.

The resounding impact would no doubt snake its way to India’s GDP, which has taken a hit of late from falling employment numbers.

Andra Greene, a lawyer with Irell & Manella LLP in Newport Beach, California, who isn’t involved in the TCS suit, told Bloomberg if the TCS case does proceed as a class action suit, it may encourage white Americans to pursue similar suits against other companies with heavily foreign workforce.

Infosys, which employs about 200,000 people around the world, has been scrambling to shore up their base in the US with local labor. It has announced that it would hire 10,000 Americans over the next two years.

As for the broader claim that TCS engages in institutional discrimination against Americans, the plaintiffs claim, reported Bloomberg, the “highly skewed” workforce results from “a corporate directive to favor visa-ready South Asian Indian national candidates to fill U.S. positions and the use of third-party recruiters that forward to Tata a substantial percentage of South Asian Indian national candidates.”

TCS contends there’s a “non-discriminatory” explanation that includes its use of workers with guest visas.

“These individuals are existing employees, were hired in India, and are thus hired from a completely different labor market,” the company said in a filing. “They cannot be used to create a statistical disparity between TCS’ workforce and the United States labor market.”

The protectionist Trump administration, which has faced heavy lobbying by pro and anti-foreign workforce as they brace for an immigration overhaul, is likely watching this case with great interest.

The administration, which has recently stepped up its efforts to implement firmly the concept of hiring domestically, is at present stymied in greater effort to shut the door on legal immigrant workforce because of the brisk economy and shrinking number of qualified labor.

However, there are indications that things could change in a jiffy, because of natural or man-made causes: according to ZeroHedge, the US economy lost 33,000 hurricane distorted jobs last month, the first payrolls decline since September 2010. It noted that the historical revisions were more problematic: total nonfarm payroll employment for July was revised down from +189,000 to +138,000,  while August was revised up from +156,000 to +169,000. With these revisions, employment gains in July and August combined were 38,000 less than previously reported. After revisions, job gains have averaged 91,000 over the past three months.

The rhetoric against foreign workers could escalate any given month, if current trends continue.

(Sujeet Rajan is Executive Editor, Parikh Worldwide Media.  Email him: sujeet@newsindiatimes.com Follow him on Twitter @SujeetRajan1)