The Nifty IT index just shed over ₹4 lakh crore in a single week because the narrative that “AI will devour white-collar jobs” has become consensus. Everyone from Dalal Street analysts to coffee-shop pundits is convinced: Artificial Intelligence is not a tool — it is a wrecking ball aimed straight at India’s $280-billion IT-BPM industry. The fear went viral because it feels visceral — coding farms in Bengaluru and Hyderabad automating themselves, BPO voice agents replaced overnight, and a negative spiral of layoffs → weaker consumption → more automation.
But what if this doomsday script is simply too obvious to be right?
The obvious trade rarely wins. Humanity has never lost to technology; the free market has always found a way. And in India’s context — with 1.4 billion aspirational consumers, the world’s largest digital payments infrastructure, and a Prime Minister pushing Viksit Bharat 2047 — the same Claude-powered “takedowns” that are spooking investors today could mark the beginning of the largest productivity explosion in independent India’s history.
The takedowns are real — but they are repricing, not collapse
Let’s not sugar-coat it. When Anthropic released Claude’s advanced coding agents in early 2026, TCS, Infosys, HCL Tech and Wipro together lost more than $56 billion in market value in days. Legacy COBOL modernisation in public-sector banks? Automated. Routine testing and documentation? Gone in hours. Generative design tools hit creative agencies and marketing firms. Even cybersecurity playbooks are being rewritten by AI agents that scan codebases faster than any human team.
Markets are pricing first-order margin compression correctly. When cognitive work becomes 10-100x cheaper, pricing power shifts from service providers to buyers. Indian IT’s 30-40% gross margins on routine work are structurally at risk. But commoditisation is not destruction. The PC commoditized hardware, the internet commoditised distribution, UPI commoditised payments — and each time costs fell, volumes exploded.
The doom loop assumes demand is fixed — India proves it isn’t
The bear case is linear and Western-centric: AI → layoffs → less spending → more AI → deeper layoffs. It assumes the Indian consumer is static. History laughs at that assumption.
When mobile data prices collapsed 95% after Jio, Indians didn’t consume the same 1 GB per month more cheaply — they started consuming 20 GB and built entire industries on top (Instagram Reels creators, Swiggy delivery, ONDC sellers). When UPI made payments free, transaction volumes didn’t stay flat; they went from 1 billion in 2017 to 228 billion in 2025 — a 33% jump in a single year.
Also read: https://orangenews9.com/what-is-inav-and-how-is-it-calculated/
AI is doing the same to knowledge work. Cheaper coding means more startups can afford custom software. Cheaper legal drafting means more MSMEs can file patents and compliance documents. Cheaper radiology reports mean Ayushman Bharat can cover more citizens. Demand doesn’t vanish; it multiplies when prices fall.
The real story is price collapse, not just layoffs
India’s services sector now contributes 56.4% of GVA — the highest ever. Much of this is high-cost cognitive labour: tax filing, insurance claims, loan underwriting, customer support, and basic software maintenance. AI slashes the marginal cost of these services from rupees-per-minute to paise-per-minute.
The result? An invisible tax cut for every Indian household and business. A kirana store owner in a Tier-3 town can now run automated accounts, digital marketing, and GST compliance for ₹500 a month instead of ₹15,000. A first-generation founder in Patna can launch an app without a 50-person dev team. This is not “jobless growth” — this is cost-less growth.
Also read: https://orangenews9.com/indias-fiscal-reset-budget-2026-27-to-power-the-next-growth-sprint/
We are moving from “Ghost GDP” (output that never reaches the common man) to “Abundance GDP” — where real purchasing power rises even if nominal wages grow slowly because the cost of living and doing business falls faster.
Labour markets will restructure, not vanish
Yes, white-collar hiring in IT has slowed. But AI struggles with physical dexterity, last-mile delivery, caregiving, advanced manufacturing and experiential services — exactly the areas where India is pushing PLI schemes, semiconductor plants and tourism. More importantly, AI is democratising entrepreneurship.
One person armed with Claude, Midjourney and UPI can now do what used to require a 20-person team. The same technology flattening some TCS benches is lowering barriers for the 63 million MSMEs the government wants to formalise. The wealth divide narrows when any 22-year-old with a smartphone can compete globally.
SaaS is evolving, not dying
Traditional Indian SaaS players face pressure on pricing. But the winners will be agentic, outcome-based platforms deeply integrated with UPI, Aadhaar, ONDC and GSTN. Zoho, Freshworks and new AI-native startups are already pivoting. Margin compression at one layer simply shifts value to data, trust, energy and verification layers — all areas where India has natural advantages.
Productivity is the variable that changes everything
India’s labour productivity growth had slowed to 0.4% annually post-2019. Early signals in 2025-26 Economic Survey show services GVA growing 9.1%. If AI adds even 1-2 percentage points of sustained productivity — through better logistics, energy optimisation, healthcare delivery, and agricultural advisory — the compounding effect over a decade is transformative.
This is exactly what Viksit Bharat needs: not just higher GDP, but GDP that translates into lower costs and higher real incomes for 1.4 billion people.
Also read: https://orangenews9.com/indias-fiscal-reset-budget-2026-27-to-power-the-next-growth-sprint/
Abundance reduces conflict and protectionism
For decades, India protected certain sectors because domestic costs couldn’t compete. When AI collapses production costs across energy, manufacturing design and services, the logic of tariffs and import substitution changes. Cheaper solar deployment, localised semiconductor fabs, and AI-optimised supply chains make self-reliance easier, not harder. Scarcity-driven geopolitics gives way to abundance-driven cooperation — whether with neighbours or global partners.
Conclusion: The world doesn’t end — it upgrades
Every technological revolution looked apocalyptic at first. The internet destroyed some jobs and created many more. AI is doing the same, but at Indian speed and scale. The Anthropic takedowns are painful signals of repricing, not collapse. The difference between “Digital India Crisis” and “Digital India Boom” is not AI capability — it is our ability to adapt.
India has always adapted. We leapfrogged landlines with mobiles, cash with UPI, and now we can leapfrog industrial-era productivity with cognitive abundance. The most underpriced outcome in 2026 is not dystopia. It is an India where knowledge is abundant, costs are lower, entrepreneurship is easier, and growth feels less zero-sum.
Those who stay objective, keep learning, and back adaptation over fear will look back at 2026 as the year the obvious narrative died — and Bharat’s true abundance era began.
