Explained: The lawsuit that will cost TCS $220 million

Tata Consultancy Services (TCS) said it will recognise a one-time charge of $70 million in the first quarter of FY27 after the US Supreme Court declined to hear its appeal in a trade secrets lawsuit brought by DXC Technology.

The additional provision will take TCS's total exposure in the case to $220 million, including the $150 million it had previously provided.

The Supreme Court's decision leaves in place a lower court ruling that awarded damages to DXC Technology and effectively ends TCS's legal challenge.

"The Company has assessed the matter and based on the current status of the proceedings, has decided to recognise an additional provision of $70 million as a one-time exceptional charge in Q1 FY27," TCS said in a filing.

The amount covers damages, accrued interest and legal expenses.

What was the dispute?

The case dates back to 2019, when Computer Sciences Corporation (CSC), a predecessor of DXC Technology, sued TCS in a federal court in Dallas.

CSC alleged that TCS used confidential information linked to US insurer Transamerica while developing a competing life insurance administration platform.

According to court records, TCS hired about 2,200 employees from Transamerica. DXC argued that some of those employees had access to proprietary systems and internal information and that TCS benefited from that knowledge while building its own software.

In simple terms, DXC accused TCS of using trade secrets obtained through former Transamerica employees to create a rival product.

TCS denied the allegations and challenged the claims in court.

Damages award upheld

A jury in 2023 found that TCS had wilfully misappropriated trade secrets and awarded DXC $210 million in damages.

US District Judge Brantley Starr later reduced the award to $168 million, including $56 million in compensatory damages and $112 million in punitive damages.

The reduced award was upheld by the Fifth Circuit Court of Appeals in 2025.

TCS then sought review from the US Supreme Court. The company argued that DXC should not have received unjust enrichment damages without showing actual losses and said the punitive damages were excessive.

DXC maintained that the lower courts had correctly applied the law.

The Supreme Court declined to hear the appeal, leaving the earlier ruling intact.

Impact on TCS

The additional provision will be reflected in TCS's June-quarter earnings.

Tata Consultancy Services reported a 12.2 per cent year-on-year rise in net profit for the March quarter, with earnings coming in slightly ahead of estimates, while revenue growth remained steady.

Net profit for Q4FY26 stood at Rs 13,718 crore, compared with Rs 12,224 crore a year ago. Revenue from operations rose 9.6 per cent YoY to Rs 70,698 crore.

On a sequential basis, the company’s performance remained firm. Profit jumped 28.7 per cent quarter-on-quarter, while revenue grew 5.4 per cent, marking the third straight quarter of sequential growth. In constant currency terms, revenue was up 1.2 per cent QoQ.

TCS stock movement snapshot

Shares of Tata Consultancy Services (TCS) gained 1.66 per cent on Tuesday to close at Rs 2,197.90 on the NSE. However, the stock remains under pressure over a longer period, declining 3.74 per cent over the past month and 31.9 per cent year-to-date, a drop of Rs 1,029.50 per share from the start of 2026.