TCS to take $70 million Q1 hit after US Supreme Court rejects appeal in DXC trade secrets case

Tata Consultancy Services (TCS) is set to incur a significant one-time charge of $70 million in the first quarter of FY27, following the US Supreme Court's decision to refuse hearing its appeal in a protracted trade secrets litigation against DXC Technology. This announcement was made by TCS in a recent filing to the stock exchange, confirming that the Supreme Court will not review a previous ruling by the Fifth Circuit Court of Appeals. In its filing, TCS stated, "The United States Supreme Court has denied our petition for a writ of certiorari to review the judgment of the United States Court of Appeals for the Fifth Circuit on June 15, 2026, in the above matter." Previously, TCS had set aside $150 million in its accounts related to this case, but now it will account for an additional $70 million to cover damages, interest, and legal fees, classifying this as an exceptional expense for Q1 FY2027. The Supreme Court's ruling maintains a lower court's decision that awarded DXC Technology $168 million due to alleged misappropriation of trade secrets concerning life-insurance software. The case dates back to 2019 when Computer Sciences Corporation, now part of DXC, accused TCS of hiring around 2,200 employees from Transamerica and exploiting their access to proprietary information to develop a competing life-insurance platform. TCS has consistently denied these allegations, asserting that the disputed information was not confidential and was accessed through lawful means. A jury in 2023 found TCS guilty of willful misappropriation, initially proposing damages of $210 million, which were later reduced by US District Judge Brantley Starr to $168 million, consisting of $56 million in compensatory damages and $112 million in punitive damages. The Fifth Circuit upheld this ruling in 2025, prompting TCS to appeal to the Supreme Court. In its appeal, TCS argued that DXC’s damages were based on "unjust enrichment" without sufficient evidence of actual losses, and claimed the punitive damages were excessively high according to US trade secrets law. However, DXC contested the appeal, asserting that the appellate court's decision was firmly rooted in established legal principles and warranted no further review.