For decades, India’s IT outsourcing giants were the blue-chip bedrock of the country’s stock market. Now their footprint is shrinking to levels never seen before.
The combined weight of India’s software exporters in the Nifty index has fallen below 7.6%, a record low driven by mounting fears that generative AI tools are about to eat the outsourcing industry’s lunch.
A $50 billion wake-up call
The Nifty IT index plunged as much as 21% in February 2026, its steepest monthly drop since 2003. That single-month selloff erased roughly $50 billion in market value from the sector.
The trigger was the rapid emergence of advanced AI tools, notably Anthropic’s Claude Cowork, capable of automating tasks across legal, sales, marketing, and data analytics — the exact kind of work that Indian IT firms have been doing for Fortune 500 clients for the past two decades.
