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

IT major Wipro hit the headlines in November 2023 when the company filed a lawsuit against former Chief Financial Officer (CFO) Jatin Dalal for violating non-compete clauses after Dalal switched his loyalty to rival Cognizant. In its lawsuit, the Azim Premji-owned company has sought more than Rs. 25 crore, along with an 18 per cent interest, in damages.

A Bengaluru court has referred the case for arbitration while directing the parties to resolve their dispute.

In its lawsuit, Wipro has alleged that Dalal has to compensate it, under the non-compete clause of his employment contract, against the stock units the company had issued to him or a sum equal to 12 months’ remuneration.

Dalal had joined Wipro in 2002 and was promoted to become CFO in 2015. Cognizant, a US MNC, hired Dalal barely a week after he resigned from Wipro in September, though the non-compete clause forbade him from joining any competitor firms for a period of 12 months. Dalal joined Cognizant immediately after his tenure with Wipro came to an end on November 30 last year.

Wipro has also sued former Senior Vice President (SVP) Mohd Haque, who also joined Cognizant.

According to Moneycontrol, Wipro has 10 major IT companies on its list which its top-level executives cannot join for a period of 12 months after serving their last day. These companies are Accenture, Capgemini, Cognizant, Deloitte, DXC (formerly HP), HCLTech, IBM, Infosys, Tata Consultancy Services (TCS), and Tech Mahindra.

Wipro has claimed that Dalal had these companies listed in his employment contract and joining any of them would be inimical to its business interest as an executive of Dalal’s stature would be privy to all information on its strategy and business, according to Moneycontrol.

“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,” Wipro said in its lawsuit as quoted by Moneycontrol.

The clause further makes it obligatory for its employees to not “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” for a period of 12 months.

Dalal was one of the core decision-makers, who entered into acquisition and negotiation deals of $100 million and above on Wipro’s behalf. He was also part of the investment committee of Wipro Ventures, with a $300-million strategic fund for startups, according to Moneycontrol.

Wipro has accused former SVP Haque of not only breaching the non-compete clause but also possessing seven confidential files.

Dalal and Haque are not the only top-level executives who left Wipro to join other companies. Wipro has in the past one year lost over half a dozen top-level executives to poaching.