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Anthropic’s new AI tool can automate routine IT tasks, threatening the time-and-materials business model used by Indian IT firms.
The market performance of Infosys, Tata Consultancy Services, and Wipro declined as investors feared lower demand for large teams of people.
Stock pricing strategy might shift from billing by the hour to paying for outcomes and faster delivery.
Anthropic has launched a new AI tool with advanced ‘agent’ features that can complete business tasks on its own, such as writing code, analysing data, preparing sales emails, and reviewing contracts. This announcement created a strong reaction in financial markets.
After the news, Indian IT stocks saw a sharp fall, and the NIFTY IT index recorded one of its steepest single-day drops in recent years. Shares of Infosys, Tata Consultancy Services, Wipro, and HCLTech declined strongly. Investors fear that AI tools like this could reduce demand for large human teams that power India’s IT services business model.
India’s IT services industry depends heavily on a time-and-materials model. Companies charge clients based on the number of hours worked by engineers and analysts. Many of these tasks include software testing, documentation, customer support, and basic coding.
Anthropic’s new tool can automate many of these routine jobs. If one AI agent can do the work of several junior engineers, clients may no longer need to pay for big offshore teams. This creates pressure on revenue that depends on headcount growth.
The fear is not only about job replacement, but about shrinking billable hours. When automation becomes faster and cheaper, enterprises will expect lower costs and quicker delivery. This changes the basic logic of outsourcing, which relied on scale and low labour costs. The old advantage of cost arbitrage may slowly lose importance.
Another important effect is on the pricing of IT services. Analysts and industry reports estimate that AI can generate hundreds of billions of dollars in value for the Indian economy over time. At the same time, they warn that margins on traditional services could fall. When artificial intelligence tools handle coding, testing, and data analysis, clients will push vendors to reduce prices.
This will force companies to move away from simple hourly billing to outcome-based contracts. Instead of paying for several engineers, clients will pay for results such as faster deployment, fewer errors, and better business performance. Firms that fail to redesign their contracts may struggle to protect profits. This shift will not be easy and may take years, but the pressure has already started.
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The biggest change might happen in skills and workforce structure. Large teams of junior engineers may no longer be needed in the same numbers. Demand will grow for people who can design AI workflows, train models, check outputs, and manage risks related to data and compliance. New roles such as prompt engineers, model auditors, and AI integration specialists will become more important.
Policy and research studies stress that reskilling is critical. Without large-scale training programs, many workers could face disruption. At the same time, firms that invest in high-end talent will be able to offer more advanced services. This means the industry may become smaller in headcount but higher in value per employee.
Despite the fear, full automation is unlikely in sensitive areas. Legal advice, regulated financial reporting, and healthcare systems still need human oversight. Enterprises are cautious about giving total control to AI agents because of data security and accountability risks. Therefore, hybrid models will emerge where humans supervise AI outputs.
This creates new service lines such as AI governance, ethics checks, and compliance management. Indian IT firms already have strong relationships with global clients and experience in risk management. These strengths can be reused in the AI era.
To survive and grow, Indian IT companies must embed AI tools into their service offerings. Instead of selling manpower, they must sell intelligent solutions. Developing industry-specific products for banking, retail, and manufacturing will help them stand out. Large firms with scale, trust, and domain knowledge are better positioned to adapt. Smaller companies that depend only on staffing may face more pressure.
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Anthropic’s new AI tool has created short-term panic in markets, but the real impact will unfold gradually. The disruption is real, but it will be uneven. Client adoption speed, regulation, and skill development will decide the final outcome.
With the right strategy, the same AI wave that threatens outdated models can create new revenue opportunities. However, without change, the traditional IT services model will face serious stress in the coming years, and growth may slow more than expected.
1. Why is Anthropic’s AI tool seen as a threat to India’s IT services industry?
Because it can perform tasks like coding, testing, and data analysis that are normally done by junior engineers, reducing the need for large offshore teams.
2. Does this mean massive job losses in Indian IT companies?
Not immediately, but demand for low-skill roles may fall while demand for AI, data, and compliance specialists will rise.
3. How will pricing models change for IT services?
Companies will move from charging per hour to charging for results such as speed, quality, and business impact.
4. Are there limits to what AI tools can replace?
Yes, sensitive areas such as legal review, financial reporting, and regulated industries still require human oversight.
5. What should Indian IT firms do to stay competitive?
They must adopt AI quickly, invest in employee reskilling, and create higher-value products rather than relying solely on manpower-based services.
