News: Infosys-Anthropic collaboration: A game-changer for IT sector?

In recent days, IT stocks have traded under constant pressure due to concerns related to rapid advancements in artificial intelligence. However, investors may now find some relief, as the country's IT services industry, once feared to be at risk, could be better positioned to benefit from the AI-driven shift than previously expected, according to a latest report from Jefferies.

The brokerage noted that early market concerns focused on the possibility of automation-led revenue pressure and large-scale white-collar displacement. However, evolving trends, especially stronger enterprise adoption of AI and the rise of company-specific models, now point to a more favourable trajectory for Indian IT firms.

One development flagged in the report is the collaboration between US-based AI company Anthropic and Infosys to create customised AI agents for enterprise customers.

The partnership is seen as indicative of where demand is heading.

The report says, "The above is clearly a positive from an Indian market standpoint since it means there may be a future for the Indian IT services sector which has been perceived as being a huge loser from AI and which has been a big underperformer in an Indian stock economy context and even more so in a global emerging economy context."

According to Jefferies, the tie-up highlights growing corporate interest in so-called small language models built on proprietary datasets.

In this emerging framework, Indian IT service providers are expected to play an important role in helping businesses transition to the latest architecture.

It mentions "that corporates will develop so-called small language models for their specific use, with their own proprietary data bases, and the Indian IT service companies will play a role in migrating corporates to this recent approach."

The brokerage added that discussions with investors in India reinforce this view, with many corporates signalling a preference for developing in-house, domain-focused AI capabilities instead of relying entirely on large, general-purpose models.

Adoption trends among major clients already reflect this shift. Roughly 90 per cent of Infosys’s top 200 customers are using its AI-related services, indicating that AI integration is moving beyond experimentation into scaled deployment.

Jefferies further said the strengthening pipeline of AI-driven services could help limit broader macroeconomic risks for India. The IT services sector employs about 5.8 million people, and there had been mounting worries about job losses and potential spillover effects on consumption if demand weakened significantly.

The firm argued that the move towards AI-enabled transformation offerings, including the “AI First” suite unveiled at Infosys’s recent investor meet in Bengaluru, meaningfully widens the industry’s addressable bazaar. The opportunity for such services is pegged at $300–400 billion by 2030.

Overall, Jefferies concluded that although Indian IT was initially viewed as a major casualty of artificial intelligence, accelerating enterprise adoption and the push towards customised models show that companies like Infosys could instead emerge as key enablers of the AI transition, easing both valuation worries and wider macroeconomic concerns.