TCS dragged to US court on misrepresentation charges

Aug 15 2013, 21:28 IST
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SummaryThe company won the bid for the job in 2007 for an amount of over $8 million.

India’s largest software services exporter, Tata Consultancy Services (TCS), has been slapped with a lawsuit by Orange County in California, USA for making “a series of false promises and intentional misrepresentations” during the bidding process for a contract. The company won the bid for the job in 2007 for an amount of over $8 million.

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The contract was to develop custom software to handle most of the Orange County’s tax functions. Tata America International Corporation (TCS America) was to develop and implement the property tax management system project for Orange County. The lawsuit was filed in April this year in the California Central District Court, according to sources aware of the development.

“As a matter of policy we don’t discuss pending legal matters. We stand by the quality of our work and commitment to customer success as demonstrated by the fact that over 98% of our business comes from repeat clients,” a TCS spokesperson said.

Orange County in its lawsuit alleges that TCS “made promises to complete the project on a budget and according to a timeline with which they had no intention of complying.”

The lawsuit further claims: “The county has suffered millions of dollars of damages as a result of defendants’ wrongful conduct and it will continue to suffer damages for the years it will take to develop a replacement for the failed project.”

Analysts do not expect the lawsuit to have any implications on the goodwill of TCS in the US since the amount is ‘irrelevant’. According to sources, Orange County has stated in the lawsuit that despite TCS claiming to perform the work onsite, it used employees working out of India for the project.

TCS posted strong first-quarter results helped by an all-round performance with strong revenue growth across markets led by the US.

The Mumbai-headquartered firm posted a net profit of R3,831 crore for the June quarter, up 15.5% from R3,318 crore in the same period last year.

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