Manoj SharmaFor years, enterprise buyers have relied on vendors’ internal metrics — low attrition rate, Glassdoor ratings, employer-brand awards — to decide who wins the outsourcing contract. These metrics served as ‘proof of concept’ for the service delivery. Buyers tend to trust the flashy numbers vendors sold them.
TaskUs’ $17.5 million settlement with investors on December 4, 2025, showed why that was a mistake.
The core of the 2022 class action lawsuit was alleged inflation of two operational vulnerabilities — a forced Glassdoor campaign to coerce new hires into writing artificial onboarding reviews and the concealment of a spike in voluntary employee resignations.
A key aspect was the court’s observation that a Glassdoor rating could be misleading even if a policy requires hires to post reviews. This meant a rating doesn’t have to be false to be misleading. “This is a classic segregation-of-duties problem: when the same role can both generate and report on its own performance data, with no independent verification step, manipulation is a matter of time,” says Yulia Plugatyreva, Senior SOX & IT Auditor at San Francisco-based financial services company Chime.
Pre-TaskUs, most procurement teams treated vendor-supplied attrition and Glassdoor data as directional but not disqualifying. Post-TaskUs, that data should be treated as unusable. The Glassdoor manipulation TaskUs allegedly ran isn’t unique; it’s just the case that got prosecuted.
— Thomas Cloud, a Fractional CTO
Repeated incidents of metric manipulations have led to a dip in trust in some outsourcing service providers. India’s Satyam ‘ghost staffing’ scam was the biggest example of metric misrepresentation on a global scale, which threatened to spoil the prospects of India’s entire outsourcing industry. Infosys was also accused of systemic visa fraud using labour arbitrage and visa misclassification in the US and was fined $34 million way back in 2013. Hindenburg Research’s report on Temenos AG also alleged earnings manipulation using ’roundtripping’ software deals.
Thomas Cloud, a Fractional CTO at US-based Vertex CTO Advisory, believes outsourcing companies’ manipulation of employee metrics to score clients isn’t surprising. “Pre-TaskUs, most procurement teams treated vendor-supplied attrition and Glassdoor data as directional but not disqualifying. Post-TaskUs, that data should be treated as unusable. The Glassdoor manipulation TaskUs allegedly ran isn’t unique; it’s just the case that got prosecuted,” he said.
The lawsuits alleged that the labour and culture control allowed TaskUs to secure a higher valuation before the initial public offering. The controversy led to the collapse of artificial premium following a report by short seller Spruce Point Capital Management in January 2022.
IT service companies are often accused of prioritizing code volume over code quality. Experts cite poor treatment of staff for high attrition, which rarely comes out in public.
“Frequently, small shops grow in places like India providing real quality output, but often — after being sold — they get squeezed for all their value. Productive teams get loaded up with multiple projects when they were hired for one. And we have seen teams who agreed to a five-day week being asked to work unpaid Saturdays,” says Keith Vaughan, Founder, Cipher Projects, an IT System Design Services company based in Australia.
The lawsuit settlement revealed the importance of metrics like employee turnover for a company’s long-term financial health. Not just for internal metrics manipulation, but outsourcing companies are also in the legal spotlight over cybersecurity failures, labor violations, and governance lapses.
Some argue the era of BPOs raising valuations by tweaking attrition narratives without triggering disclosure obligations has ended.
Post-TaskUs, legal experts suggest workforce metrics should be treated as financial metrics. Before these numbers are presented to investors, they should go through a proper documentation process and audit testing. “Checks and balances are important on any data going to the public,” Braden Perry, a litigation, regulatory, and government investigations attorney with Kansas City-based Kennyhertz Perry, says, adding that deceptive practices investigations could also trigger state consumer protection statutes and AG inquiries, proving to be reputationally damaging for companies.
To avoid getting misled, enterprise buyers must demand independent verification methods, says Cloud. Attrition should be scoped to a company’s named delivery team on a rolling six-month window, not the vendor’s blended annual number, he suggests. “Every metric the vendor reports must be independently measurable from the buyer’s own systems.” LinkedIn tenure cross-check on the specific team assigned to a client’s account should be a part of the verification process.
All About the TaskUs Lawsuit
TaskUs held its initial public offering on June 15, 2021, receiving net proceeds of $120.7 million.
In the offering documents for the IPO, TaskUs had claimed to have “industry-leading growth and profitability” and insisted that its “market opportunity is over $100 billion.” TaskUs supported these claims, in part, with market data that showed “the content moderation solutions market was $5.3 billion in 2020” and estimated to “grow at a CAGR of 40-50% from 2016 to 2021”.
Additionally, TaskUs overstated the size of its workforce and touted its “low employee attrition levels,” which “lead to lower hiring and training costs and higher employee productivity.”
The truth emerged after Spruce Point’s 80-page report stated that TaskUs “has a pattern of exaggerated and inflated business claims, including revenue, and is covering up financial strain with reduced disclosures, cherry-picked market data, and non-standard key performance metrics.
It also found a pattern of “embellishing the size of its workforce and making overly optimistic revenue growth claims”. Following the report, the price of TaskUs stock fell $5.46 per share, or more than 15%, from $35.59 per share on January 19, 2022, to $30.13 per share at the close of trading on January 20, 2022.
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