India, March 2 -- The recent sell-off in technology stocks was treated by many as just another bout of market volatility. But instead of thinking of it as a random market panic, it shows something else.

In a matter of weeks, Indian IT companies lost nearly INR 6 lakh crore in market value. The Nifty IT index dropped more than 20 per cent, one of its sharpest corrections in decades. This was not triggered by a collapse in earnings. It was triggered by anxiety: AI is beginning to change the economics of the very model on which India's IT industry was built.

For more than three decades, the IT services sector has been one of India's greatest economic success stories. In FY 2024 - 25, exports touched roughly $224 billion. The sector contrib...