Indian IT stocks are facing a moment of reckoning. The launch of plug-ins for Anthropic's Claude Cowork agent, designed to automate tasks across legal, sales, marketing and data analysis, has rattled investors and triggered a sharp selloff last week in what has long been one of India's most reliable growth engines.
Indian software exporters lost $22.5 billion in market value last week, with the Nifty IT index falling about 7%, marking its steepest weekly fall in more than four months. The rout mirrored a brutal global selloff. Roughly $800 billion was wiped off the S&P 500 software and services index before a rebound, its worst performance against the broader market in 25 years, according to SocGen.
Some analysts warn that the IT sector, the flagship for India's exports since the 1990s, could be vulnerable to rapid advances in AI.
"The market fears (the AI tools) may replace IT services that are currently outsourced. What the real impact will be remains to be seen," said VK Vijayakumar, chief investment strategist at Geojit Investments.
Jefferies struck a darker tone. "There is more pain ahead for Indian IT," it said, adding that Anthropic's and Palantir's claims highlight how AI could potentially erode application-service revenues. "With application services accounting for 40%–70% of revenues, firms face growth pressures, and consensus growth estimates do not fully reflect this, posing downside risks to valuations," Jefferies said.
Brokerage Motilal Oswal estimates that 9%-12% of industry revenues could be eliminated over the next four years due to AI-led disruption.
The timing is particularly relevant. India's IT industry is otherwise benefiting from geopolitical tailwinds, with trade deals struck with the United States and the European Union expected to support cross-border services exports and reinforce India's position as a trusted technology partner.
But those policy positives offer little insulation from technological shock. While trade deals can help expand the volume of outsourced work, AI-led automation threatens to compress project timelines and reduce billable hours, striking at the labour-intensive model that has underpinned India's IT boom for decades.
No comments:
Post a Comment