Fears that agentic AI tools such as Anthropic’s Claude Cowork plug-ins could automate core enterprise processes and disrupt the traditional SaaS model triggered a sharp sell-off in global tech stocks, dragging down US software majors and wiping over ₹2 lakh crore off the market capitalization of Indian IT firms, even as Indian industry leaders argue the impact will be evolutionary rather than disruptive in the near term.
On Tuesday, Freshworks shares closed at $9.53, down 10.6 per cent from the previous day’s close. Salesforce shares closed at $196.38, down 6.85 per cent, while ServiceNow went down by 6.97 per cent to $109.77.
Market Route
Meanwhile, the Nifty IT index fell nearly 6 per cent, driven by rising concerns over AI’s impact after Anthropic launched new workplace productivity tools. This marked its worst performance in six years. The development also sparked a sharp overnight sell-off in US tech stocks, with spillover effects across European and Asian markets.
Palantir’s CTO Shyam Sankar, on their recent earnings call, also shared that the company’s AI-powered forward-deployed engineer (AI FDE) can reduce the time to complete “complex SAP ERP migrations” from years to as little as two weeks, which in large enterprises earlier could typically take two years. This has sparked investor concerns over the long-term viability of the SaaS business model.
Industry veteran Ashok Soota, the Chairman & Chief Mentor of Happiest Minds Technologies, noted that these developments represent a significant opportunity for the company.
“As an AI First company, we view Anthropic’s innovation as a catalyst for growth, reinforcing the role of IT services in guiding organizations through technological transformation. There is excitement around AI platforms and plugins since they drastically lower the entry barrier for creating software. However, this does not reduce the need for companies like ours and only enhances it,” he said.
He also highlighted that every major disruption, right from SaaS to cloud computing, has only expanded the role of IT services. Happiest Minds’ AI platforms act as accelerators, with value created when AI is embedded into core business processes and aligned with enterprise, regulatory, and security requirements, driving industry differentiation and customer outcomes.
AI isn’t plug-and-play
Ravi Kumar, CEO, Cognizant believes that no tool or technology can be plugged into an enterprise landscape and magically deliver output and that if this were the case value must have already drifted to enterprises over the last three years, over which AI has been widely discussed. “The reality of integrating tools to the operating layers of an enterprise is much more complex. You need companies which will build a bridge and that can integrate AI-led technology with human labor,” he said.
Similarly, Zoho’s Chief Scientist Sridhar Vembu, in a post on He added that the pressure on the SaaS industry started before AI due to business model inconsistencies. “An industry that spends more on sales and marketing than on engineering and product development was always vulnerable,” he said.
However, Pareekh Jain, founder and CEO of EIIR Trend, a research and forecast firm, noted that the recent sell-off was primarily triggered by concerns around global SaaS companies as agentic AI challenges the traditional seat-based, monolithic software model. With agents building and operating software quickly, investors fear SaaS will be reinvented. Anthropic’s strong performance with its legal plug-in served as a proof point, raising expectations that similar plug-ins could disrupt other enterprise functions.
Anthropic and similar players lack legacy businesses, allowing them to push agentic AI rapidly. In contrast, while legacy firms like Microsoft, Salesforce, and Indian IT services players are also developing agents alongside existing businesses, adoption and replacement will be more gradual.
“The fallout extended to Indian IT stocks because of their dependence on SaaS clients. While demand for IT services will continue—particularly for integrating evolving software, hardware, and AI stacks—pressure could emerge if SaaS spending slows or clients demand lower billing as agentic tools automate more work. Over time, enterprises may scrutinize service providers on productivity and headcount efficiency. This may force them to adapt at a quicker pace,” he said.
For now, IT services are relatively insulated, but both SaaS vendors and service providers will need to reinvent their models as agentic AI matures.
Similarly, other experts observed that Claude’s plug-ins will change the economics of SaaS and IT services. Prasad Valavade, Practice Head – Data, Analytics and AI, Apexon, noted that Claude’s plug-ins shift GenAI from assistance to execution, enabling workflow-level automation across enterprise systems.
“Claude’s impact will be incremental rather than disruptive in the near term. Plug-ins can support automation in well-defined, repeatable areas like L1 support, standardized analytics narratives, and rule-based process steps where data and decisions are predictable. Simultaneously, enterprise outcomes continue to depend on capabilities like process redesign, secure data access, system integration, and change management. These elements require necessary execution and operating maturity, meaning the role of IT service providers is evolving to complement thoughts. AI-driven automation rather than being bypassed,” he said.
However, the plug-ins are likely to influence highly repeatable and transactional areas. Activities like documentation, basic analysis, routine support, early-stage application support, standardized reporting, testing artifacts, and back-office workflows are increasingly amenable to automation and may shift toward more in-house, AI-assisted execution over time.
AI moves from assistant to collaborator
The frenzy around Claude is also being driven by the rise of vibe coding, which Cowork takes a step further by letting users describe intent in plain language and have AI co-build software or operate existing tools in real time—without prior training or deep knowledge of the software. Cowork-style plug-ins shift AI from a passive assistant to an active collaborator in software development and usage.
“Traditional IT services are built around process-heavy, people-intensive execution. Their main job has been implementing software or sometimes building it for client requirements; however, supporting this software usage for the long term is a major revenue source, also called billing hours. Cowork helps in reducing these directly using Cloud agents,” Abhijeet Kumar, Co-Founder and CEO, Tablesprint, an AI platform for enterprise software development, said. The company leverages Claude as the core LLM for its AI-driven enterprise app development platform.
While foundation models won’t eliminate IT service providers, they will force a fundamental reset. Enterprises still need partners who understand legacy systems, security, governance, and real-world constraints that models alone can’t navigate. What will disappear is the idea that value comes from the number of people deployed. Kumar highlighted that service providers who act as orchestrators of AI, systems, and outcomes, not just execution engines, will flourish.
“There is a pattern of enterprises periodically reassessing which activities are performed internally versus outsourced, typically driven by cost, control, and internal capability. Improvements in internal tools can make certain functions more feasible to manage in-house for organizations with sufficient scale and technical expertise. At the same time, outsourcing continues to be preferred where work requires large delivery teams, specialized skills, or round-the-clock operations. As a result, the likely outcome is a recalibration. in the mix of outsourced activities rather than a broad or immediate reversal of outsourcing models,” Rishi Agrawal, CEO and Co-founder of Teamlease Regtech, said.
Such shifts do not occur overnight. New technologies are not yet mature or time-tested at enterprise scale, nor have they been widely deployed in production environments. Large organizations place a premium on scale, risk mitigation, accountability, and continuity of delivery, particularly where compliance and operational obligations are involved. Existing procurement, audit, and governance frameworks are not designed to accommodate rapid, wholesale migration.
Legal AI needs human oversight
In the case of the legal profession, automation is most commonly seen in contract review and document analysis – particularly in reviewing clauses, spotting potential risks, and running regulatory checks.
Cowork’s legal plugins can scan, interpret contracts, manage compliance tasks, and draft standard legal documentation on a massive scale, reducing the time spent on mundane tasks for lawyers. That said, these tools are no substitute for human expertise and still need oversight by lawyers to make decisions, said Adv. Varun Singh, Founder & Managing Partner, Foresight Law Offices India.
“The pressure on the traditional billable hour model will rise due to tools like Claude Cowork. AI can do Time-consuming but low-stakes tasks like reviewing contracts, background checks, ensuring compliance, and legal research, leaving lawyers with fewer hours to bill for the same work. Clients now know AI can handle these tasks faster and at lower cost, reducing willingness to pay for routine legal work. Instead, they want to see the value in the outcome of the services. This is driving law firms toward fixed-fee, value-based, and subscription pricing. While high-stakes cases and advice will still command top dollar, AI reduces the profit margins on more commoditized legal services, forcing them to re-evaluate the pricing and delivery of legal services,” Singh noted.
As a result, clients’ expectations will change, and so will the way legal firms measure the value of external legal services. Routine tasks like contract analysis, risk flagging, and legal research will be expected to be completed instantly – and if they’re not, clients won’t wait nor want to be hit with massive hourly bills.
With inputs from Rohan Das in Chennai
Published on February 4, 2026