India, Feb. 5 -- Shares of top Indian information technology services were battered on Wednesday, mirroring the decline in US technology and software stocks over renewed fears of disruption caused by artificial intelligence. Shares of TCS, Infosys, HCL Tech, Wipro, and Tech Mahindra were down 6.95%, 7.19%, 4.22%, 3.73% and 4.12%, respectively, at close on Wednesday, while the Sensex was largely flat at 83,817.6 points. The selloff was triggered by a new tool from Anthropic, called Claude Cowork Plugins, which showed the AI industry can now unlock lucrative enterprise revenue. The impact was not limited to technology companies. Advertising stocks also stayed under pressure with France's Publicis down 4.1% and Britain's WPP losing 3.3%. Fractal co-founder Srikanth Velamakanni attributed the fall in Indian IT services stocks to the new AI automation tools. "In India, a lot of enterprise services rely on unstructured data. Those stocks are clearly going to be compressed because AI models are increasingly doing an amazing job of interpreting unstructured data - video, voice or text," Velamakanni said in reply to a query from Mint. "Any service that is about processing these data sources will get compressed and will get impacted. A lot of the work that tech services companies do is around working with structured data in a very complex enterprise context. So they will be protected a little bit more, but their stocks also might see some correction in the short term," he added. Fractal provides AI solutions such as customer relationship management analytics, cognitive automation, quantum computing, and machine learning operation services. Its clients range from financial services and health to insurance and retail markets worldwide, and 65% of its revenue comes from the US market. Its revenue jumped 26% on a yearly basis to Rs.2,765 crore ($306 million). The freefall in IT stocks is also partly due to heightened uncertainty amid low demand for their services. Tariff flip-flops by US president Donald Trump and geopolitical tensions around key trade routes in the Middle East have prompted Fortune companies to reduce their tech spends and divert the funds to their primary businesses. This is reflected in the muted growth of India's largest IT services firms, which are now staring at a second consecutive year of sub-5% growth at best. However, experts said the decline was primarily due to the rise of AI automation tools, which could reduce the demand for humans in tasks such as coding, software development and maintenance, effectively shrinking the billable hours for Indian IT companies. At least one brokerage said that automation was likely to limit the sector's growth. "AI is likely to limit growth in the IT services market to 1.5%-3% CAGR over 2024-29 due to three key reasons. (1) Clients may delay IT spends on concerns of rapid AI advancements rendering current investments obsolete. (2) AI-led productivity gains may impact existing IT services revenues by 20% over FY25-30, while growth opportunities arising from AI may be back-ended. (3) Clients have not fully realised ROIs on elevated incremental tech. spends of $280 billion on average over 2021-24 versus $130 billion over 2016-20," Jefferies analysts Akshat Agarwal, Surinder Thind and Ayush Bansal said in a note dated 11 September....