‘This is a market overreaction’: Tech Mahindra CEO Mohit Joshi on Anthropic AI threat to Indian IT firms

Shares of Indian IT companies slumped on February 4 after US artificial intelligence firm Anthropic’s launch of a legal AI tool reignited fears around rising competition and the impact of AI on traditional IT services and software companies. Reacting to the sell-off, Tech Mahindra CEO and managing director Mohit Joshi termed the market response a clear overreaction. Referring to Anthropic’s announcement, Joshi said investors have become increasingly nervous about the perceived threat of AI to software-as-a-service (SaaS) and IT services firms. 

"I certainly feel that it looks like a significant market overreaction. As you know, the market has been skittish about the impact that AI will have on SaaS companies. So earlier, the impact was only on the IT services or the consulting companies that had seen drops in valuation. Over the past couple of weeks, that contagion appears to have spread to the SaaS companies as well, with the fear that AI will replace SaaS companies and services. As we discussed, we feel that there is a significant amount of work that still needs to be done. At the end of the day, this is a technology shift. And every single technology shift in history has proven to be a tailwind for the services and for the software business," Joshi said.

The sell-off followed the release of an updated version of Anthropic’s chatbot Claude, which includes a new plug-in for legal services. The development unsettled global technology stocks, with Indian IT exporters tracking weakness on Wall Street, which had closed sharply lower a day earlier.

Joshi pushed back against that view, arguing that productivity gains from AI vary widely depending on the nature of IT environments. “If you’re talking about a greenfield estate, where you’re building a new IT setup from scratch, productivity can be very high because it’s all new architecture and new languages,” he said. “But if you’re talking about a legacy estate, which is what 99 per cent of enterprises have, the productivity numbers are much more modest.”

He added that the scale of the market reaction appeared disproportionate to recent developments. “I do feel that this is a market overreaction to a very specific piece of news. It certainly appears to have been very widespread,” Joshi said. “We saw Accenture, IBM and Cognizant drop by around 10 per cent, but there was also a huge impact on Salesforce and ServiceNow. It feels like a massive overreaction to nothing that has materially changed over the past two weeks.”

In Indian markets, the sharp decline in IT stocks dragged the Nifty IT index down more than 7 per cent to an intraday low of 35,809.50 on Wednesday. The index later recovered some ground to close at 36,345.65. Heavyweights including Infosys, Tech Mahindra, LTI Mindtree and Tata Consultancy Services fell as much as 8 per cent during the session, reflecting the broader global rout in technology shares.

Equity markets go in red

Global equity markets remained under pressure this week after Anthropic unveiled a new suite of AI tools for corporate legal teams, intensifying fears of disruption across the legal and enterprise software industry. The announcement, made last week, triggered sharp sell-offs in European legal software firms, US technology stocks and Indian IT shares.

Anthropic said the tools, embedded in its AI assistant Claude, are designed to automate routine legal work such as contract reviews, non-disclosure agreement checks, legal summaries and standard drafting. Delivered as plug-ins for in-house legal departments, the new Claude Cowork add-ons also extend into sales and marketing, finance and accounting, data analysis, productivity and search. Together, they turn Claude from a text-based chatbot into an AI agent capable of executing tasks across a user’s Mac files and browser. 

The sell-off spread quickly across geographies. In the US, shares of legal and information services companies such as Thomson Reuters, LegalZoom and London Stock Exchange Group fell more than 12 per cent, with losses later widening across the broader software sector. Two S&P indices tracking software, financial data and exchange-related stocks together erased nearly $300 billion in market value.

Weak global cues spilled into Asian markets. Indian IT exporters bore the brunt of the pressure, with the Nifty IT index sliding 6.3 per cent on Wednesday. Infosys was among the worst hit, plunging 7.3 per cent, while Tata Consultancy Services, HCLTech, Tech Mahindra and Wipro also posted sharp early losses. China’s CSI Software Services Index fell 3 per cent, Hong Kong-listed Kingdee International Software Group tumbled more than 13 per cent, and in Japan, Recruit Holdings and Nomura Research dropped 9 per cent and 8 per cent, respectively.

Amid the turmoil, Nvidia chief executive Jensen Huang sought to calm investor nerves, dismissing fears that artificial intelligence would make software companies obsolete. Calling the idea “illogical”, Huang said AI systems would continue to rely on existing software tools rather than rebuild them from scratch. “If you were a human or a robot, would you use tools or reinvent tools? The answer is to use tools,” he said, adding that recent AI breakthroughs are centred on effective tool use.