OpenAI move revives fears, pushing India’s IT shares to three-year low

India’s technology sector just had one of its worst days in recent memory, and the catalyst wasn’t a missed earnings report or a client bankruptcy. It was OpenAI announcing it wants to do what Indian IT companies do, but with AI doing the heavy lifting.

The Nifty IT index fell approximately 3.7% to around 28,235, its lowest level since May 2023. Every single one of the index’s 10 constituents closed in negative territory. LTIMindtree led the rout with a decline of around 5%, followed by Tech Mahindra at roughly 4.4%. Infosys and TCS, the sector’s heavyweights, shed between 2% and 5%.

What OpenAI actually did

OpenAI introduced what it’s calling a “Deployment Company,” a new business unit staffed with forward deployed engineers whose job is to help enterprises integrate AI into their operations. The company also acquired Tomoro, a consulting firm, signaling that OpenAI isn’t content with just building AI models. It wants to sell the implementation, too.

In English: OpenAI is moving into the enterprise consulting and integration business. That’s the exact territory where Indian IT giants like Infosys, TCS, Wipro, and HCL Technologies have built multi-billion-dollar empires over the past three decades.

The numbers tell a brutal story

This isn’t a one-day panic. The Nifty IT index has dropped over 25% year-to-date, a staggering decline for a sector that was once considered a defensive cornerstone of Indian equity portfolios.

Brokerage firms have been sounding alarms for months. HSBC, for instance, has flagged that rising enterprise AI spending could directly cannibalize traditional IT service budgets.

Why this feels different from previous AI scares

Indian IT stocks have weathered AI anxiety before. When ChatGPT launched in late 2022, there was a similar wave of concern. But the sector largely shrugged it off because the technology was still raw, enterprise adoption was slow, and nobody had figured out how to reliably deploy large language models in production environments.

This time, the threat is more concrete. OpenAI isn’t just releasing a chatbot and hoping enterprises figure it out. It’s hiring deployment engineers, acquiring consulting expertise, and building the go-to-market infrastructure to compete directly for the same corporate IT budgets that fund contracts with Infosys and TCS.