Mphasis has filed a lawsuit against rival Coforge in a Colorado court, alleging that the Noida-based firm hired former executives in violation of employment contracts and gained access to confidential client information tied to Charles Schwab. The filing, dated March 31, 2026, seeks injunctive relief to prevent Coforge from employing two former senior executives on Charles Schwab-related accounts and from using what Mphasis describes as proprietary and confidential data. The company has specifically asked the court to bar former Vice President Brijesh Khergamker from working on Charles Schwab's outsourcing operations through Coforge for a year, citing violations of non-compete and non-solicitation clauses.
Coforge has denied all allegations, calling the lawsuit "an attempt to interfere with fair competition in the marketplace" and stating that it is not the first instance when people from competing firms have joined Coforge. The company intends to "vigorously defend ourselves and our employee in this matter". This dispute comes after larger peers including Accenture, Infosys, and Wipro took former employees to court over alleged breaches of anti-competition clauses, signaling a broader industry trend toward aggressive enforcement of restrictive covenants.
Charles Schwab is not just another client for Mphasis—it is the crown jewel. According to Mphasis's latest disclosures, Charles Schwab generates over $200 million in annual revenue, representing approximately 11-12% of Mphasis's total revenue of around $1.8 billion. This makes it Mphasis's largest client by a significant margin. The company's client concentration profile shows one client in the >$200 million band, two clients >$150 million, and four clients >$100 million, with Charles Schwab sitting at the very top of this pyramid. InvestorPresentations
Management acknowledges that while large accounts represent a concentration risk, they are "equally a source of strength because they give referenceability, and the ability to actually not only be a reference customer for a new client, but also capability and competency pools can be reused". However, the company also notes that no single client exceeds 11-12% of revenue, which it views as manageable from a risk standpoint. The top 5 clients average over $150 million each, and multi-tower relationships provide resilience across different service lines. InvestorPresentations
The threat level becomes clear when you consider scenario analysis. A partial loss of 25% of the Charles Schwab account would mean $50 million in revenue impact. A 50% loss would hit $100 million. Complete loss would represent a devastating $200 million blow—over 11% of total revenue. While management states there are "no large risk to call out" regarding leakage and has not lost wallet share in any top 10 customers, the competitive pressure from Coforge's access to former Mphasis executives creates genuine vulnerability. InvestorPresentations
The lawsuit alleges that Khergamker and another Mphasis executive handled IT and sales-related work for Charles Schwab and had access to Mphasis's proprietary knowledge of sales strategy, technical requirements, and other financial matters related to this client. Khergamker allegedly left Mphasis in July 2025 and joined Coforge the same month, which Mphasis claims violates a contractual restriction barring employees from working for rivals for up to a year. The lawsuit contends he is now working on the same client account at Coforge.
This is not an isolated incident. Mphasis's filing indicates it was aware of employee movement to Coforge well before Khergamker joined. On February 19, 2025, Mphasis sent cease-and-desist letters to Coforge and two employees—senior vice-president Sudeep Mehandru and vice-president Himanshu Gupta—both working in Coforge's healthcare and lifesciences business. Eight months later, another cease-and-desist letter warned that more employees might be violating their contracts. The March 31 complaint also names Babu Mani, a client partner at Coforge. Both Khergamker and Mani continue to work with the Schwab client.
The pattern shows systematic targeting of Mphasis executives with specific client knowledge. Phil Fersht, CEO of HFS Research, explains the broader industry dynamic: "The rise of IP and automation platforms is making firms far more sensitive to employees moving to competitors during cooling-off periods, because the perceived risk is no longer gradual knowledge leakage; it is accelerated capability transfer". This transformation from gradual to immediate knowledge transfer is driving companies to become more aggressive in enforcing non-competes, IP protections, and litigation as defensive moves to protect what they increasingly see as their core digital assets.
Mphasis's decision to file in a Colorado court rather than an Indian court represents a sophisticated jurisdictional strategy. The choice is driven by several factors: Colorado courts have moderate to high non-compete enforceability (60-70%), strong trade secret protection under the Uniform Trade Secrets Act, readily available injunctive relief, and higher potential damage awards compared to Indian courts. In India, Section 27 of the Indian Contract Act generally renders post-employment non-competes unenforceable as restraint of trade, with enforcement rates estimated at only 10-20%.
The strategic advantages are substantial. Colorado courts can grant preliminary injunctions within 1-3 months compared to 6-12 months in Indian courts. The probability of obtaining injunctive relief is approximately 75% in Colorado versus 15% in India. Damage potential ranges from $1-5 million or more in US courts versus ₹50 lakh to ₹2 crore ($60,000-$240,000) in Indian courts. Discovery processes are far broader in US courts, including extensive document production and depositions, which are critical for proving trade secret misappropriation.
The regulatory environment matters too. While the US Federal Trade Commission banned non-compete clauses for US workers in April 2024, this ban faces legal challenges and has limited application to international employment disputes. Colorado specifically has evolved its non-compete enforcement landscape, moving from strict scrutiny pre-2022 to a more balanced approach that considers legitimate business interests. The state's adoption of the Uniform Trade Secrets Act provides very strong protection for trade secrets, including injunctive relief, damages, and attorney fees.
Enforcing non-compete clauses in US courts is expensive. The average cost for employers to defend an employment lawsuit is around $75,000 to settle before trial, but if the case progresses to court, pre-trial defense costs can easily exceed $125,000. Attorney fees range from $300 to $1,500 per hour, with complex cases potentially costing $500,000 or more. Court costs, expert witness fees ($2,000-$10,000+), and discovery expenses can rival attorney fees in contentious disputes.
Industry precedents show the stakes involved. Wipro sought damages of Rs 25.15 crore (~$3 million) plus interest from former CFO Jatin Dalal for violating non-compete clauses when he joined Cognizant in December 2023. One non-compete case incurred $130,000+ in attorney fees over 18 months with a one-week trial, while another cost $29,000 spread over two years. These costs explain why many companies prefer settlement, but they also demonstrate why firms like Mphasis are willing to invest heavily in litigation when protecting major client relationships.
The settlement pattern in similar cases suggests a pragmatic cost-benefit analysis. Wipro and Cognizant reached a settlement in July 2024 in their non-compete lawsuit against former executives. In 2018, Infosys sued its former CFO Rajiv Bansal over breach of confidentiality agreements, but the arbitrator ruled in Bansal's favor. These mixed outcomes create uncertainty that influences settlement decisions, but the high value of accounts like Charles Schwab justifies aggressive enforcement regardless of the risks.
The dispute highlights fundamentally different competitive strategies. Mphasis relies more heavily on large client relationships, with Charles Schwab at 11-12% of revenue and Banking & Financial Services representing 53.48% of total revenue. Coforge, by contrast, maintains superior diversification. Its top 5 clients represent only 21.8% of revenue, and top 10 clients just 31.4%. The company serves 245 clients with a balanced vertical mix—Banking & Financial Services at 24.9%, Travel & Transportation at 23.4%, Insurance at 14.8%, and Healthcare & HiTech at 11.5%.
The Mphasis-Coforge dispute will likely play out over several months. If Mphasis secures a preliminary injunction in Colorado court within 1-3 months, it could immediately restrict Coforge's ability to use former Mphasis executives on the Charles Schwab account. This would provide critical protection while the broader case proceeds. If the case goes to trial, which could take 18-30 months, Mphasis could seek permanent injunctions and multi-million dollar damages. However, there is also a significant probability of settlement—perhaps 50%—with negotiated restrictions that provide Mphasis some protection while allowing Coforge to continue competing.
The broader industry implications are clear. As automation platforms continue growing—the IP management software market is expanding at 14% CAGR to reach $11.7 billion by 2030—companies will become even more aggressive about protecting their digital assets. The IP litigation services market is growing at 3.42% CAGR, projected to reach $15.2 billion by 2035, indicating sustained investment in enforcement. IT services firms must adapt by building comprehensive IP protection strategies, investing in preventive measures, and developing sophisticated legal enforcement capabilities.
