Debasis Mohapatra
Bengaluru. 12 Feb 2026
Indian IT stocks have been falling since the beginning of this month as fears around rising AI adoption disrupting the business model of IT companies aggravate. Investors are worried that services segment of the IT outsourcing industry will be significantly taken away by AI-powered platforms, creating a dent in the revenue and margin of Indian IT companies.
On Thursday, most Indian IT stocks were in the range of 3-7%, making another trading session of rising bearish bets. So far this year, Nifty IT Index was one of the worst performers with the index down by 10% year to date.
Why IT stocks are falling?
Multiple factors are driving the current downfall. But the most significant among them is the accelerating AI adoption across the world, which is disrupting most parts of the digital economy.
Anthropic’s Plugins & ChatGPT-backed insurance app:
Anthropic’s Claude CoWork has released 11 plugins in the domains of product management, marketing, legal, finance, enterprise search, bioresearch, and data. This launch has raised fears of AI agents taking over the entire workload, in which Indian IT companies operate. This week, ChatGPT-backed online insurance platform Insurify launched a ChatGPT-based app that allows users to compare auto insurance rates using inputs such as vehicle details, credit history, and driving records. Such development indicated that AI is increasingly entering into the domain of IT services companies and SaaS firms. Investors fear that this is likely to adversely impact earnings of these firms.
Impact is all pervasive:
Indian IT companies have gone through several technology cycles since dot com era. From cloud to digital, IT companies had successfully navigated such disruptions and emered stronger. However, the current AI-related development seems different from earlier cycles. Reports said that Citi in a report said the AI-related technological progress seems all-pervasive. Unlike cloud or digital, AI has the potential to disrupt every sector. Therefore, the current cycle is different and may hit the labour arbitrage-heavy operating model of Indian IT players.
AI-led projects are not enough:
AI is definitely creating new opportunities for Indian IT services companies. Management commentary of IT firms showed that they were getting more AI porjects each quarter. However, analysts fear that these projects are smaller in size as compared to legacy projects and are not enough in number to offset the loss coming from revenue erosion in legacy projects. Therefore, a revenue dip seems plausible. Traditionally, large IT companies are dependent on large deals to accelerate revenue growth. Given the high base, any miss in the deal pipeline will impact earnings of these companies.
However, AI is still at an evolving stage and investors’ panic selling may not justify the current developments, said analysts.
