A Bengaluru civil court has ordered Indian IT outsourcer Wipro to go into arbitration with its former CFO, Jatin Dalal, over accusations the latter violated a non-compete clause by joining competitor Cognizant.
The order was handed down this week, with a copy [PDF] appearing on local legal news site LiveLaw.
Dalal served as an employee of Wipro for more than 21 years. His departure was announced on September 21, effective at the end of November. A week later, Cognizant announced it had picked up Dalal as its new CFO, effective in December.
The news was enough for Wipro to file a complaint in Bengaluru city court that Dalal had not adhered to his employment agreement, which it claims prevents him from working for 10 named competitors for a period of one year from leaving Wipro.
The outsourcer also sought $3 million in damages plus 18 percent interest per annum from its former employee in a lawsuit it filed in late November.
It’s a hefty sum, even for an exec, but with a reported $5.2 million salary and $300,000 sign on bonus, he’ll probably still be able to avoid having to dine on instant noodles. His base salary, for the record, is listed on his contract as $750,000 per annum.
That Cognizant contract would also have required Dalal to agree that he was not bound to any non-compete agreement with any previous employer or other party that working for his new employer would violate.
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Dalal has asked for arbitration in his dispute with his former employer. He has also reportedly asserted that non-compete clauses are a violation of Indian Contract Law.
It’s a claim that played large in the same industry’s COVID-era employee grab, as staff attrition hit record highs and the issue of moonlighting was on full display.
Wipro even fired 300 employees for moonlighting with competitors in September 2022.
In that context, The Register was told by labor union Nascent Information Technology Employees Senate (NITES) that noncompete clauses are aren’t worth the paper their written on: Section 27 of India’s Contract Law essentially states that any agreement restraining a person from engaging in their profession or trade is invalid.
But now, the ones being restrained from engaging in their profession or trade by joining other companies, are, we dare say, of a different income bracket. A number of legal eagles agree that the agreement is unenforceable, at least in India outside of the employee’s tenure with the company.
A whole host of Wipro execs have recently left for Cognizant, including the company’s former senior vice president of healthcare and medical devices Mohd Haque, against whom Wipro filed a complaint in New Jersey in the US courts. That complaint not only alleges a violation of non-compete agreement, but also alleges he “relocated” confidential information.
But the poaching problem goes beyond just Wipro, transforming into what has become an industry-wide issue.
For starters, Infosys has reportedly sent Cognizant communication asking it to back off of poaching its employees.
Cognizant has hired what is predicted to be at least 20 executive vice presidents and four senior vice presidents from Wipro and Infosys, including Anurag Vardhan Sinha, Nageswar Cherukupalli, Narsimha Rao Mannepalli and Shweta Arora from the latter.
Infosys CFO Nilanjan Roy also recently resigned from Infosys, as did HR head Richard Lobo, who landed at Tech Mahindra, and CISO Vishal Salvi, who went to software firm Quick Heal Technologies. CEO Mohit Joshi also left for Tech Mahindra last year.
Meanwhile, Wipro has also lost its chief growth officer, Stephanie Trautman, last month. All eyes on where she lands. ®
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