What the Infosys counterclaim says about Cognizant in the TriZetto trade secrets case

'Encouraging disloyal employee behaviour', 'Cognizant bullies clients': Details of the high-stakes antitrust clash between Infosys, Cognizant

The legal tussle between Infosys and Cognizant has reached the next level, with the Bengaluru-based company filing a counterclaim against its Teaneck-based competitor. The high-stakes court battle between the IT giants has come full circle with each accusing the other of engaging in anticompetitive practices and obstructing competition in the healthcare IT sector.

Moneycontrol has viewed a copy of the counterclaim filed, which reveals that Infosys has accused Cognizant of attempting to monopolise the healthcare IT sector in the US with a “dangerous probability of success”.

For context, while the healthcare vertical accounts for a fourth of Cognizant's total revenue, it makes up about 7 percent of Infosys's revenue.

Phrases such as “encouraging disloyal employee behaviour” and “Cognizant bullies its clients” also appear in the filing, which shows the extent of the seriousness of the case.

There is also personal history here, as Cognizant CEO Ravi Kumar is an Infosys veteran and has served as its President and Deputy COO before leaving. Moneycontrol had earlier reported that Infosys had also issued a letter to Cognizant, asking to desist from poaching its executives.

Infosys’s counterclaim outlines a detailed narrative of alleged misconduct, including Cognizant’s use of restrictive contractual terms, unfair hiring practices, and efforts to delay Infosys’s entry into the healthcare software market with its new platform, Infosys Helix.

Here is an in-depth look at the allegations, the legal context, and what this might mean for the future of the industry.

Brief Background

In August 2024, Cognizant’s subsidiary Cognizant TriZetto alleged that Infosys had stolen trade secrets related to its healthcare insurance software. Infosys rebutted this then, stating it would vigorously defend the lawsuit in court.
In response, Infosys not only denied these allegations but also accused Cognizant of instrumenting an antitrust scheme to dominate the healthcare payor software market.

Cognizant Trizetto claimed that the allegedly stolen software applies TriZetto’s proprietary medical claims processing to a proprietary database structure, which reduces the administrative expenses associated with claims processing.
Also, that TriZetto’s products and services provide solutions to the highly complex medical claims and payments processing problem in healthcare and improve healthcare operations.

Key Allegations by Infosys

Infosys alleges that Cognizant uses restrictive “most favoured vendor” clauses and contractual barriers to stifle competition in the healthcare IT services market. They allegedly prevent clients from hiring third-party IT vendors like Infosys for Cognizant’s software products, effectively locking them into a closed ecosystem.

“The effect is to give Cognizant the contractual ability to exclude its primary competition in the IT services market by discouraging or preventing payors from hiring third parties,” read the lawsuit filed against Cognizant.

Infosys also claimed that even when clients attempt to engage competitors, Cognizant’s Non-Disclosure and Access Agreements (NDAAs) impose terms that limit the scope of work competitors can perform, restrict employee mobility, and obstruct interoperability with competing software platforms.

Market Dominance

Infosys’ counterclaim also focuses on Cognizant’s 2014 acquisition of the TriZetto Group, which gave it control of the widely used Facets and QNXT healthcare payor software platforms.

According to Infosys, this acquisition led Cognizant to monopolise the healthcare IT services market, as 65 percent of insured individuals in the US are covered by payors using these software systems.

Cognizant is also accused of eliminating competition by refusing to provide training and by imposing restrictive access provisions in contracts.

“Cognizant’s monopolistic strategies include imposing restrictive contractual obligations with no legitimate purpose and barring Infosys from participating in training programs it was traditionally offered while continuing to make training available to others,” the document further read.

Targeted Hiring

A significant aspect of Infosys’s counterclaim revolves around the Kumar-led company’s hiring practices. Infosys alleges that Cognizant targeted senior executives responsible for the development of its next-generation software, Infosys Helix.

This cloud-based, AI-driven platform was seen as a direct competitor to Cognizant’s legacy systems.

Infosys alleges that during his tenure, Kumar delayed the development of Infosys Helix and withheld critical resources, thereby, leading to significant project delays.

Similar accusations have been levelled against other executives who moved from Infosys to Cognizant, such as Shveta Arora and Ravi Kiran Kuchibhotla.

Legal Framework

“Cognizant has artificially raised entry barriers through its exclusionary NDAA provisions and engaged in gross impropriety by using its power to encourage employee disloyalty at Infosys and obtain its competitively sensitive information,” the lawsuit read.

The counterclaim invokes violations of the Sherman Act and the Texas Free Enterprise and Antitrust Act.
Infosys argues that Cognizant’s actions have harmed competition, resulting in higher costs for healthcare payors and diminished innovation in the industry. Consequently, the company is seeking damages and injunctive relief to curb what it describes as anticompetitive practices.

“Because software and IT services are a major expense for payors, Cognizant’s anticompetitive conduct has significantly contributed to the persistently high and growing healthcare costs that the public must bear,” India’s second-largest IT firm further alleged.

Infosys alleged that Cognizant’s anticompetitive conduct has led to persistently high and growing healthcare costs that Americans ultimately have to bear.

Looking Ahead

Industry observers will be watching closely for its potential to set new precedents in antitrust law, particularly in the technology and healthcare sectors.

With both companies entrenched in their positions, this legal battle is far from over.