Wipro's non-compete clause: 10 rival firms executives cannot join for 12 months

Representative image

In a year when Wipro lost over 10 of its top level executives, along with several others below them, to different companies, only former chief financial (CFO) Jatin Dalal and SVP Mohd Haque, both of whom joined rival Cognizant, ended up getting sued by the IT services giant for breaching non-compete clauses in their employment contracts.

This comes at a time when other key leaders like former chief operating officer (COO) Sanjeev Singh and former iDEAS business head Rajan Kohli also joined rival firms such as CMS IT Services and CitiusTech, respectively, in CEO positions.

So, what gives?

According to Wipro’s lawsuit copy against Dalal, which was accessed by Moneycontrol, the company has a fixed list of 10 major IT companies who are competitors that senior executives cannot join within 12 months of them serving their last day at Wipro.

These firms include Accenture, Capgemini, Cognizant, Deloitte, DXC (formerly HP), HCLTech, IBM, Infosys, Tata Consultancy Services (TCS), and Tech Mahindra.

As a part of the non-compete clause, Dalal had the names of these companies mentioned in his employee contract, Wipro claimed. Joining any of these companies in the stipulated period concerns Wipro, as someone in Dalal’s position would be privy to confidential information in relation to the company’s strategy and business.

Wipro declined to comment on the detailed queries sent to the company.

The lawsuit said, “During the period of employment and for a period of twelve (12) months after his/her last date employment and irrespective of the circumstances of or the reason for such separation, the Optionee acknowledges that he/she shall not accept any offer of employment from a customer or client with whom the Optionee has interacted or worked in a professional capacity representing the Company during the six (6) months preceding the last date of employment or any Competitor of Wipro or the Company.”

“During the period of employment and for a period of twelve (12) months following termination of his/her employment and in the geography for which the Optionee is responsible in the previous 12 months (i) directly or indirectly engage with a Competitor whether such engagement shall be as an employer, officer, director, owner, employee, partner, consultant, advisor or as any other participant, or (ii) assist others in engaging with Competitor in the manner described in the foregoing clause,” it added.

Dalal, during his tenure, was one of the core decision makers and signatories on the company’s acquisitions, strategies, and large deal negotiations of $100 million and above. He was also on the investment committee of the $300-million strategic fund of Wipro Ventures, which invests in early- and mid-staged startups.

His last date of work was on November 30, 2023.

Wipro’s top level exodus & lawsuits

Apart from suing Dalal for breaching non-compete clause, Wipro is also seeking Rs 25.15 crore in damages from him, along with 18 percent interest per annum until the time of full payment. Recently, the Bengaluru City Civil court referred this case to arbitration.

Wipro also sued its former SVP and head of healthcare and medical devices for the Americas, Mohd Haque, who also joined Cognizant recently. Haque is facing accusations of possessing seven files containing confidential information, which were sent from his personal Gmail account and flagged by Wipro’s IT team along with violating his non-compete clause. The company additionally claims that there were more files that got uploaded and sent outside the company to his personal email account.

Not just Wipro, Infosys too wrote to Cognizant in an attempt to deter the company from poaching more senior leadership talent from the former.

Along with Haque and Dalal, in 2023, Wipro also lost Singh, Kohli, Americas 2 CFO Nithin V Jaganmohan, India head Satya Easwaran, Vice President Gurvinder Sahni, Americas 1 CFO Kamini Shah, and head of the manufacturing and hi-tech business unit Ashish Saxena.

Most recently, Wipro’s chief growth officer Stephanie Trautman stepped down as the company is restructuring its growth organisation by integrating the Strategic Pursuits team, formerly under the CGO, into Strategic Market Units.

Business slowdown    

These top level changes came at a time when Wipro, the country’s fourth largest IT services firm, is struggling to turnaround its business in a challenging demand environment.

As of Q2, which ended in September 30, Wipro’s revenue declined for the third consecutive quarter, coming in at $2.7 billion. Revenue slid 2.3 percent sequentially, and 2 percent in constant currency terms, falling at the lower end of the company's guidance for the quarter.

In the upcoming quarter the company expects a revenue decline, ranging from -3.5 percent to -1.5 percent.