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How the TCS-Epic case could impact the IT services sector

Indian IT services companies with software platforms could be forced to rethink their operational set up after the massive fine imposed by a Wisconsin federal jury against TCS.

While TCS has denied the allegations of stealing healthcare software from American company Epic Systems, analysts say that it’s time for Indian tech firms to legally and physically separate their software divisions.

“IT firms need to be at an arm’s length from their software divisions and create a separate legal entity for them. Not only does the software unit require to be a separate legal entity, but the company should also ensure that the employees and management are also totally independent. Unless, that happens, such allegations cannot be ruled out,” said Sanchit Gogia, Chief Analyst & CEO of Greyhound Research.

Not many IT services companies currently follow this practice. Infosys separated its software product company, which remains a fully-owned subsidiary, in 2014.

Source: Hindu Business Line

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