In today’s Finshots, we see if a simple “copy-paste” action cost TCS over $200 million.

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The Story

2 days ago, there was a tweet from a gentleman named Dale Vaz that said–"Copy Paste may cost TCS 1,750 crores in fines!!"

What?? How??

Well, that's the question we had. So we went digging.

This case goes back to 2019 and involves a company called Computer Science Corporation (CSC). They are a software service provider primarily working with insurance companies. One of their products “Vantage” has been a staple of the insurance industry. It helps companies create new policies, calculate returns and manage claims and CSC has been licensing Vantage to some of the biggest insurance players in the world, including Transamerica–a US-based life insurance company.

This company had been using Vantage since at least 1994. However, in 2018, Transamerica announced that they were going to migrate from CSC’s Vantage to a different solution marketed by TCS, called BaNCS. And in the process, Tata Consultancy Services bagged a $2 billion contract.

CSC obviously wasn’t very happy with this development. They believed TCS did not have a product ready for the US market. The BaNCS software worked well in Europe. But the US market was different. It had different requirements, different regulations etc. CSC believed that it should have taken TCS at least 5-7 years to adapt BaNCS for the US market. However, TCS was promising to do it in record time. So either they were lying or there was something amiss.

And CSC pegged that there was in fact something more sinister brewing in the background.

What led them to this conclusion you ask?

Well, several things. First, TCS’s history with Transamerica. The Indian software giant had been helping the company maintain their IT systems since 2014. And as part of the maintenance work, they had access to Vantage. Then in 2019, they hired close to 2,200 Transamerica employees, many of whom were intimately familiar with CSC’s Vantage solution. And right around the same time, one of CSC’s employees found something very interesting. He had been working at one of Transamerica’s facilities overseeing the use of Vantage software. He was there to help, of course. But also to keep an eye on things. And on March 2019, he was marked in an email discussion between TCS and Transamerica employees. The folks at Transamerica were trying to figure out how the Vantage software did a particular set of calculations. And what happened afterwards, depends on whose version you want to believe.

Here is CSC’s version: TCS was having some difficulty replicating these complex calculations in the BaNCS platform. So in a set of email exchanges, they accessed and shared confidential information about Vantage with several colleagues, including those who worked on the BaNCS development team. One team member even copied the source code and shared it via email. Hence the name “copy-paste” saga.

But then, there is TCS’s version. They say that they were simply responding to a routine query. After all, they were expected to help Transamerica maintain Vantage. And so when one of Transamerica's employees was concerned that a certain set of calculations wasn’t accurately accounting for a particular scenario, he reached out to the people at TCS. And they responded by accessing Vantage’s source code to troubleshoot this issue. The licensing agreement does in fact cover such use, so long as it helps Transamerica maintain their systems.

So who do you believe?

Well, it doesn’t matter who you believe. Because a jury in the US court has found TCS guilty and they have asked the company to pay $210 million in fines. But that’s not all. Even if you did want to side with TCS, this isn’t the first time they have been found guilty.

Take the case of Epic Systems vs TCS. Epic is a leading developer of electronic health record software. And in 2003, they licensed their software to the largest managed healthcare provider in the US–a company called Kaiser Permanente.

Kaiser in turn signed a deal with TCS back in 2011, to test and maintain their systems. Now at first, TCS had limited access to Epic’s electronic health record software even though they were expected to help Kaiser maintain and rigorously test the solution. They even asked Epic to offer better access, which the company promptly declined.

But then, TCS hired a gentleman out of Chennai. He had previously worked for a different company and he had gained full access to Epic’s health record solution by falsely identifying himself as an employee. And at the insistence of his superior at TCS, he shared his credentials (which surprisingly were still valid) with several TCS employees.

They then used this information to build a competing solution called Med Mantra and even drafted a comparative analysis between Med Mantra and Epic’s software to win clients in the US. The comparative analysis sheet had intimate details about Epic’s software that would have been available only to people with access to confidential information. And when a TCS employee, Philip Guionnet saw the document, he decided to blow the lid on this whole affair. Epic sued TCS and won $140 million in damages.

So did copy-paste really cost TCS millions of dollars?

Of course not. It's not just copy-paste. It's more than that. During the court case with Epic, TCS employees even lied to investigators. That isn't an oopsie. That is deliberate misdirection. And perhaps it has to do something with how intellectual property is treated in India. TCS would have likely gotten away with this if this happened back home. However, courts in the US don't give you a free pass. They will hold you accountable. And in this case, accountability has come at a very steep price.

Until then…

In June this year both TCS and Transamerica decided to mutually terminate their $2 billion contract. So this is a lose-lose for TCS anyway you look at it.

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