From Reuters via The Hindu, February 25:
The Nifty IT index has plunged 21%, marking its steepest monthly fall in nearly 23 years, amid fears that rapid AI-led automation could disrupt India’s $300-billion IT services model
Indian shares have lagged their Asian and emerging market peers so far in February, pressured by a $68.6 billion rout in the market value of information technology stocks, as investors fretted over disruptions linked to artificial intelligence.
The Nifty 50 index has risen 0.4% so far this month, while the Sensex edged 0.1% lower, underperforming both the MSCI Asia ex-Japan and MSCI Emerging Markets indexes.
The 10 Nifty IT constituents have lost a combined $68.6 billion in market capitalisation in February, as of the last close, with the index down 21% and on course for its worst monthly performance in nearly 23 years.
All 10 index members have fallen between 16.8% and 27% in February to date. Coforge is the steepest percentage decliner, down 26.8%, while Tata Consultancy Services and Infosys have led the value erosion, losing about $21.9 billion and $16.3 billion in market value, respectively.
The selloff reflects growing concerns that rapidly advancing automation tools could compress project timelines and disrupt the labour-intensive delivery model underpinning India's roughly $300-billion IT services industry.
Investors have zeroed in on the AI-driven automation push from U.S. firms such as Anthropic and Palantir, heightening concerns over faster project execution, pricing pressure and reduced billable hours.
Brokerages warn the Indian IT sector could face further pressure if AI starts to eat into application services revenue, which typically accounts for 40% to 70% of total revenue for these companies.
"There are no easy answers to whether AI eventually renders IT services obsolete over the long term," said analysts led by Abhishek Pathak of Motilal Oswal.
"The narrative that AI is coming for not just IT but large swathes of the economy could be too strong to shake, at least in the short term," Motilal Oswal analysts said....
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