Revenue growth has slowed, deal sizes are under pressure, and pricing power is weaker, making each large account and senior leader disproportionately important
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Murali N Krishnaswamy
Slowing growth, rising AI adoption, and the increasing value of proprietary enterprise knowledge are driving a structural rise in litigation across the Indian IT industry, as firms become more aggressive in pursuing rivals and former executives over trade secrets, client access, and employee movement.
Recent legal disputes in the Indian IT industry have largely centred around trade secrets, executive movement, and client access. Infosys and Cognizant are locked in a battle involving allegations of trade secret theft and anti-competitive poaching practices while Wipro sued former CFO Jatin Dalal over an alleged non-compete breach after he joined Cognizant. Mphasis has accused Coforge of poaching employees and improperly accessing client-related information, and TCS has faced allegations from Epic Systems over trade secret theft linked to the healthcare sector. Most of these disputes are being fought in US courts.
Valuing Systems
Moreover, IT services are no longer only about selling more people and hours, according to Biswajeet Mahapatra, Principal Analyst, Forrester. Value now sits in proprietary methods, automation, AI assets, and deep knowledge of client systems. Because of this, certain employees and internal processes are more valuable to the business.
“When growth is easy, companies tolerate employee movement and informal rules. But when growth slows, they become more protective. As a result, firms are more willing to use formal legal action to protect what they see as valuable assets. Even though the number of lawsuits is small compared to the industry’s size, the reasons behind are long-term and unlikely to go away soon,” Mahapatra explained.
Talent Movement
Revenue growth has slowed, deal sizes are under pressure, and pricing power is weaker, making each large account and senior leader disproportionately important. Senior talent now carries embedded client trust, domain knowledge, and transformation road maps, not just management skills. This makes exits feel like value leakage rather than routine attrition, increasing the likelihood of legal escalation.
Gerald (Jerry) Manoharan, Partner – JSA advocates and Solicitors, explained that Indian IT is becoming more aggressive in pursuing legal action as it views talent movement and client-facing employee exits as direct competitive risks rather than routine attrition.
“The perceived threat is that the movement of senior employees and their teams means the transition of customers to the competition. With senior employees often accessing confidential data, pricing strategies, delivery models, and key customer relationships, companies are seeking to deter alleged misuse of trade secrets and organised talent poaching by rivals. There is also a growing emphasis on enforcing contractual obligations and signalling stronger protection of business know-how and client relationships,” he said.
Guard Rails
Pooja Ramchandani, partner at Shardul Amarchand Mangaldas & Co, noted that the Indian Contract Act 1872 prohibits any agreement in restraint of trade or carrying on a lawful profession or business. Thus, employees are free to join a competitor but cannot work simultaneously for a competitor while employed.
Courts grant protection of confidential information and IP and look favourably into allegations where there is a demonstrable breach of non-solicitation obligations and tortious interference. Litigation is a strategy to delay employees from joining competitors and protect client relationships.
However, US courts provide stricter protective rules when it comes to non-compete enforcement and discovery. Contracts are strategically structured to create a nexus with the US to achieve favourable and expeditious remedies.
Evolved Frameworks
As a result, overseas jurisdictions with stronger enforcement frameworks may increasingly become preferred forums for such disputes. Manoharan added that multinational litigation could rise as Indian IT firms expand global AI and digital offerings, with disputes increasingly centred around AI ownership, proprietary data, confidentiality obligations, and employee movement across jurisdictions.
“As Indian IT companies increasingly develop proprietary AI-driven solutions, there may be a greater need for clearer legal recognition and protection of trade secrets, confidential business information, and AI-related IP. The industry may also require more evolved frameworks around ownership of AI-generated outputs, use of enterprise datasets, employee confidentiality obligations, and cross-border enforcement issues, particularly given the global nature of technology services,” Manoharan said.
Published on May 7, 2026
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