The release of a new automation tool from US artificial intelligence platform Anthropic this week wiped out Rs 2 lakh crore from Indian information technology companies on Wednesday. Brokerages remain largely divided but measured on the long‑term implications of Anthropic's AI tools for India $250 billion IT sector.
The crash originated in Western markets before spreading like a contagion to Indian IT behemoths, marking a permanent realignment of how value is perceived in the age of AI.
Anthropic included a legal tool on its website that it says it can automate work like contract reviewing and legal briefings. The company's AI coding tool, Claude Code, was publicly launched only in May last year and reached $1 billion in annualised recurring revenue by November, as per reports.
Concerns Overdone?
Analysts at Macquarie believe concerns around AI‑driven revenue disruption are overdone, noting that Indian IT firms primarily serve large global enterprises with highly complex, multi‑country SAP and ERP environments. Large‑cap IT companies still derive meaningful revenue from ERP‑led transformation work, which remains resistant to full automation despite limited disclosure today, they said.
BofA viewed Anthropic's Claude plugins largely as a read‑through for SaaS vendors rather than IT services. A note said AI adoption is strongest in compliance, risk, QA, and developer productivity use cases such as documentation and code search. While AI‑assisted coding can deliver 10–15% productivity gains, translating these into tangible revenue benefits will take time.
Morgan Stanley said recent commentary from managements indicate financial services outlook improving but 2026 growth acceleration is still lacking. Company executives believe AI will expand total addressable spend, positioning IT services firms as key integrators between new AI tools and legacy processes.
Eroding Income
Analysts at Citi and Jefferies were more cautious. The former highlighting muted constant‑currency growth across top Indian IT firms relative to Cognizant Technology Solutions Corp., alongside rising competitive intensity, faster growth in Global Capability Centers (GCCs), and macro uncertainty. The latter warned that AI‑enabled automation could erode application services revenues that contribute 40–70% of total income. Current growth expectations may underprice this risk, prompting a selective stance favoring HCLTech Ltd., Infosys Lyd., Coforge Ltd., and Sagility Ltd., a note said.
Besides the potential hit to earnings, analyst also flagged AI's impact on existing workstreams as a key risk. Indian IT companies have been recently cutting existing roles as rapid automation requires fewer hands. The sector has been a go-to career option for millions of computer-savvy youth entering the workforce yearly since the early 2000s.
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