The Tamesis
Indian technology stocks lost $22.5 billion from their value this week as recent AI tools launched by Anthropic and Palantir impacted Indian software exporters.
Sell-off in shares of Indian software exporters started on Tuesday, continues despite trading surprises agreement between new delhi and washington Helping the country’s benchmark index post its best week in three months.
After plunging 6% on Wednesday, the stock plunged 2% on Friday, its biggest one-day drop in six years.
Also on AF: Anthropic’s new tool shows AI poses risk to India IT services revenue
The IT index was the day’s worst-performing sector, falling about 7% for the week, its biggest weekly decline in more than four months.
This sell-off is Software and data services stocks plunge globallysparked by Anthropic’s launch of an AI tool that automates tasks in legal, sales, marketing and data analytics functions.
Analysts say fast-growing artificial intelligence tools could upend India’s $283 billion IT industry, which has become a global center for outsourcing services and relies heavily on labor-intensive delivery models.
VK Vijayakumar, chief investment strategist at Geojit Investments, said: “The market is worried that (artificial intelligence tools) may replace currently outsourced IT services. The real impact remains to be seen.”
Some IT companies say they have benefited from customers showing a greater willingness to fund AI projects despite being cautious about discretionary spending amid global economic uncertainty.
Top IT companies TCS, Infosys and Wipro have secured AI-led deals and launched domain-specific platforms in verticals such as BFSI and healthcare as customer adoption accelerates.
Still, the IT index is now down nearly 18% since the start of 2025, including this week’s sell-off. Foreign investors sold Indian IT stocks worth $8.5 billion in 2025, a record high.
A hybrid analysis of the impact of artificial intelligence
Industry observers are divided in their assessment of the situation.
Centrum Broking’s Piyush Pandey called the sell-off a “knee-jerk” reaction.
“AI tools are already being developed, and that’s where the industry is heading right now. However, they are not currently expected to materially disrupt the industry,” he said.
Others say the industry should brace for more pain ahead.
“Of course, there will be other tools being developed that can automate tasks and increase competitive intensity in the IT industry,” said Arun Malhotra, fund manager at CapGrow Capital.
He added that companies may take steps to address these challenges, including acquisitions, but “we don’t expect the IT industry’s glory days, which have disappeared over the past few years, to return anytime soon.”
- Vishakha Saxena Additional Editor, Reuters
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