US court clears TCS of class action lawsuit claiming it favours Indians

Indian IT presence in US remains under the cloud even as companies go all out to hire locally

In a major victory, a California jury has cleared Tata Consultancy Services Ltd (TCS) of a class action lawsuit claiming that it discriminated against American professionals in favour of staffing its US offices with Indian professionals.

On Wednesday, a federal jury in Oakland, California, sided with TCS against four former employees who claimed they’d been sidelined and fired because of their non- South Asian origin. Other Indian companies like Infosys, HCL Technologies and Wipro are facing similar lawsuits in US.

“We have always maintained, the claims made in this case were baseless and we are gratified that the jury agreed… The decisions we make about the hiring and retention of employees are based purely on their capabilities and fit in serving our customers' business needs,” said TCS in a statement.

TCS has almost 30,000 employees in US, which makes it the largest local employer among Indian IT services firms. Plaintiffs had claimed that since 2011, TCS had fired 12.6 per cent non-South Asian workers compared to less than 1 per cent South Asians.  Last December a local US court had dismissed a similar lawsuit against TCS following an accusation of discriminatory practice against local Americans in hiring for coding jobs.

The Donald Trump administration has been imposing increasing constraints and scrutiny of H1B visa applications which are the primary source of employing and retaining skilled immigrant professionals for a large number of technology companies in the US with Indian professionals being the largest beneficiary group (almost 70 per cent). 
 

In recent times the US Citizenship and Immigration Services (USCIS) has introduced new changes require the employer to provide detailed information about H-1B worker employment conditions, which include disclosing all intended places of employment, including short-term placements, providing an estimate of total number of H-1B workers at each place of intended employment in caseworkers are employed to work at third-party worksites, clear identification of such secondary entities involved among others.

The last one might be a larger source of concern for companies as it might require them to disclose their clients which is classified information. Among the Indian IT majors Tata Consultancy Services (TCS), Infosys and Wipro have been very vocal about their hiring initiatives from campuses across US as well as increasing sub-contracting costs. However, analysts believe that since these brands are yet to mature in the US markets, it would take them time to attract the talent cream.

Over the past five years, TCS has registered a 57 per cent growth rate in its US employee base. With over 12,500 offers during this period, the Company is among the top IT employers in the country. In a bid to hire local tal,ent the IT giants have also established partnerships with local universities and education programs to develop the requisite skill base.

Industry watchers had been confident that TCS would fight the large-scale anti-American classification not just because the potential payout will be huge but also because that will allow ex-employees of its clients to blame their situation on the IT giant. A global immigration expert who did not wish to be named said, "One reason why many of the tech companies are forced to hire non-Americans is thathire they are not keen on moving between cities for their jobs, which is not a concern for H1B visa holders. This wrongfully gives the impression that South Asians are favoured."

“Irrespective of their background or national origin, we will continue to invest in our people, provide ongoing digital training and empower them to succeed at TCS and, more importantly, enable our customers’ success. 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,” said TCS in a statement.