Indian IT stocks declined by 2% on Friday, continuing a steep weekly downturn that has now reached 7%, wiping out approximately 2 trillion rupees ($22.5 billion) in market value. The sell-off comes amid growing concerns that rapid advancements in artificial intelligence could disrupt the high-margin application services segment, which has long been a cornerstone of India’s software export industry. Investors are increasingly wary that AI-driven automation and generative tools may reduce demand for traditional IT services, including custom software development, maintenance, and business process outsourcing. The slump reflects broader unease about the long-term sustainability of current business models in the face of technological disruption, as global tech giants and startups alike roll out AI platforms capable of performing tasks once handled by large teams of developers and consultants. While Indian IT firms are actively investing in AI capabilities and digital transformation services, the market remains skeptical about their ability to adapt quickly enough to preserve margins and growth. The sector’s recent performance underscores the mounting pressure on Indian tech exporters to redefine their value proposition in an era where AI threatens to reshape the very foundation of their business.