New Delhi, Feb. 10 -- For over a year, Indian IT's titans have sold a comforting narrative: that AI is a tool, not a terminator. Infosys Ltd. Chairman Nandan Nilekani assured investors of a "new wave of growth," while Tata Group's N. Chandrasekaran positioned TCS to lead an "AI-led" future.

But last week, the markets challenged this poise. The catalyst was the arrival of Anthropic PBC's new plugins that execute multi-step professional workflows, and Palantir's claim that AI can compress years-long ERP (enterprise resource planning) migrations into weeks.

As US software stocks shed billions, and the Nifty IT index plummeted, it looked like the "all is well" illusion of Indian IT had finally cracked. The fear is that the $250-billion serv...